Objectives of Budget

Main objectives of budget:-

The Objectives Of Budgeting are as follows:-

Budget provides the yardstick against which future results can be compared;

With the establishment of the budget, action(s) can be taken by management if there are any material variances against budget;

Budgets enable management to plan and anticipate in areas of adequacy in working capital and scarce or type of availability of resources;

Budgets are able to direct capital expenditure in the most profitable direction;

Assist to plan and control earnings and expenditure so that maximum profitability can be achieved;

It act as a guide for management decisions when unforeseeable conditions affect the budget;

Assist in decentralizing responsibility on to each manager involved. With the setting of budgets, the managers involved will better understand what the company expects from them. Therefore there is a congruence of goals between the company and the employees