Question

Discuss the statement, "Good budgeting is essential".

Answer 1

The aim of Budgeting is the actual costs match the budget . This budget is usually with negotiations with the Customers who will provide the funds Good Budgeting is the essential to ensure that the money does not run out before the period ending. Where shortfalls were likely to occur the organization will need early warning and accurate information for enabling good decisions to best manage the worst situation.

Organizations which will need to account and charge to a very high level of accuracy, like . commercial IT Service providers, will need to invest much more effort in the development of IT Accounting and Charging systems apart from those which seek only a fair, simple apportionment of costs back to business units. IT Accounting will be used to determine the exact costs of resource usage down to the CPU, filestore and bandwidth but it is rarely advisable to use this as the basis for charging as the costs of so doing will outweigh the benefits. It is in interest of all parties to keep the overall cost of service low to a minimum, even at the expense of total precision.

Budgeting will enable the organization to:

• easily predict the fund required to run the IT Services for a given period
• will ensure that the actual spending will be compared with predicted spending at any point
• will reduce risk of overspending
• make sure that the revenues will be available to cover predicted spending