plz do it according to austraslian concept Document Preview: BUACC 2613Management Accounting 1 Semester 1, 2013Assignment – Essay ( 1500 – 1800 word) Go to: HYPERLINK...

Budgeting

Introduction
Planning is the extreme significant tool which organizations need to move ahead, to grow
and to gain competitive advantage. The main focus of the organization is setting the goals which
rests on the growth of the organization and profitability. To achieve the targets and goals, the
focus should be on strategic planning. (Eric D. Beinhocker, 2006)
The management focuses on implementing and executing strategic planning on a day to
day basis, reason is to fulfill the targets and goals and to attain the competitive benefit in market.
Amongst the various concepts of planning, budgeting is the most important concept.
Budgets are the detailed plans in which the estimates of utilization and purchases of different
resources are expresses in numerical and quantitative terms.
Budgeting is the significant tool for management which assists in evaluating the
performance of the organization. It helps in taking various decisions i.e. in decision making and
also in controlling and evaluating the financial aspects. (Eric D. Beinhocker, 2006)
It helps at the time of evaluation of the performance of the individual department and
overall organization. Budgeting also helps in analyzing and monitoring the performance of the
organization.
Five main commitments of budgeting are: planning, allocating resources, facilitating
communication and coordination, evaluating performance and providing incentives, and
managing financial and operational performance. (Eric D. Beinhocker, 2006)
Planning
The aim behind the preparation of budget is to measure the plans and goals of the
organization for a definite period. Because of budgeting only, the organizations are successful in
planning for their future.
Budgeting

Allocating Resources
Budgeting helps in the proper allocation of resources to numerous uses, result of which is
the overall efficiency of the organization.
Facilitating Communication and Coordination
Communicating the plans of every manager becomes necessary for achieving effectively
and efficiently the goals of the organization. Other managers should be alert of the plans of the
other managers and other department, because it helps in coordination and working efficiently
and effectively so as to achieve the overall desired goals of the organization.
Managing Financial and Operational Performance
Budgets are the standards of the performance of the organization and it formulae the basis
of evaluation between the budgeted and actual performance. Budgets are used to monitor and
analyze the operating and financial performance of the organization.
Evaluating Performance and Providing Incentives
The work of the manager’s is to compare the budgeted performance of the organization
with actual performance; the comparison is used in analyzing the performance of departments,
individuals, and the organization as a whole. The process of comparison is known as the variance
analysis which helps in calculating and deciding the incentive of departments and individuals
who performed well. Incentives will be given to those who meet the benchmarked set for the
reward....