Budgeting Essay Example | Topics and Well Written Essays - 500 words - 3

Budgeting - Essay Example In this way, the managers will be motivated to achieve the desired budgetary targets. Budget is like a pressure device. For example, each department is given a certain budgetary goals and targets and they are to be achieved within a specified period of time. Consequently, the department manager will be required to work hard and take necessary steps for achieving the budget targets. Sometimes, the given budget targets are difficult and challenging. In that condition, the department manager feels the pressure because the given targets look unachievable. Budgetary control can be defined as determining and evaluating planned budget with the actual results and taking necessary measures to obtain the budget objectives. In the budgetary control, first a budget is planned and its objectives are also determined. Subsequently, after getting the actual results, they are compared with the planned budget. After that, if certain budget objectives are not met, the causes will be investigated and then the corrective measures will be taken. Activity based budgeting means budgeting based on activities. In this budgeting process, activities which incur cost are summarised and recorded and subsequently analysed. After this step, it is the responsibility of related department manager to identify and establish relationship between them. By knowing the relationship between cost and activities, the managers become in a position to develop an achievable. Based on the relationship between activities and costs, the managers can use the actual results and forecast the cost behaviour and its subsequent trend and impact on the overall budgeting process. Zero based budgeting means entire budgeting process should be started from scratch. The budgetary objectives, goals, budgetary targets, budgetary planning and other features of budgeting are started from zero level. On the other hand, flexible budgeting is different than zero based budgeting because only some adjustment is