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(Drury) The Budgeting Process - The multiple functions of budgets

Q: What are the useful functions of budgets? (6)

1. Planning annual operations 2. Coordinating the activities of the various parts of the organization and ensuring that the parts are in harmony with each other 3. Communicating plans to the various responsibility centre managers 4. Motivating managers to strive to achieve the organizational goals 5. Controlling activities 6. Evaluating the performance of managers

6 important questions on (Drury) The Budgeting Process - The multiple functions of budgets

What are the useful functions of budgets? (6)

1. Planning annual operations
2. Coordinating the activities of the various parts of the organization and ensuring that the parts are in harmony with each other
3. Communicating plans to the various responsibility centre managers
4. Motivating managers to strive to achieve the organizational goals
5. Controlling activities
6. Evaluating the performance of managers

Why is there still a planning step in budgeting?

The major planning decisions will already have been made as part of the long-term planning process.
However, the budgeting process leads to the refinement of those plans, since managers must produce detailed plans for the implementation of the long-range plan.