Question

Discuss the role of budgeting in planning, control, and decision making. Provide examples for each of these three categories in terms of how budgeting could play a role.

Answer 1

Budgeting: The rols of budgeting is to allocate fund or cost for each and ervy important activity. it helps in controlling the money to be invested and making every activities accountable to follow based on the budget given.

Planning: It plays pivotal role in effective decision about how strategies needs to be placed and how resources can be utilised. Planning helps in reducing risk . it is a preparing step for sequence of activities to achieve some specific goals.

Control: This steps helps in controlling various activities and monitor it properly. For eg: Control charts helps in analysing the output and do necessary steps to reduce the defects in process and also control in budget monitor the activities and reduce the chances of overshooting the budget.

Decision making: It is an important activity which takes decision based on the requirement by understanding the specific goals, understanding long term objectives, economic or market situations etc.

Budgeting requires proper plan like what actually needs to be under budget and how it should be arrived ( like % increment requires , areas to be concentrated etc.). PLanning helps in forecasting the requirement and provide sequanetial stpes inorder to accomplish the budgeting activities , decision kaking for budgeting determines the actual budget allocation and desicions like make or buy to ctornol the budget. Controlling has more roles in budgeting like tracking the flow of cash and understand the over head spend in detail.