Budgetary Controls

In: Other Topics

Submitted By Undrell28
Words 426
Pages 2
Abstract

Over the years many companies have been established with one sole purpose. That sole purpose is financial gain. Many of these companies fail at obtaining financial gain because of lack of planning and poor management. There are steps to follow when creating a system to monitor and control various activities at different levels or divisions.
This paper will talk about the concept and benefits of having a budgetary control system.

The Concept Budgetary Control In order for a company to operate successful, it is important for the company to evaluate its financial status on a weekly, monthly and/or quarterly basis. In order to do so a budgetary control reporting system must be created. This system identifies which type of budget reports will be created to compare the actual financial activity of the company with the projected activity, when each report will be evaluated, and what information will be obtain from the reports. Once reports are analyzed by executives and managers try to determine what may have caused the budget variance as well as trying to correct the problem to improve the outcome. Budget Formats and How They Are Used

The type of budget format used for a company depends on how the company wants to analyze its financial activity. The two budget formats are static and flexible. Static budget reports are used by an company that analyzes its financial activity as a whole. Many companies use a static budget report when creating a master budget. Flexible budget reports are used for a company that analyzes it financial activity by departments. There are companies that use both a static budget and flexible budget when analyzing financial activity because it provides a breakdown of variable costs and fixed costs during a reporting period.
Benefits of Budgetary Control
There is no guarantee that a company will always have financial…...

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