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They budget for many reasons; to control spending, to set goals, to control the direction of the company, and to run effectively.
Controlling spending is an obvious reason.
Setting goals is another. For instance, if x department meets a goal, they may get a budget increase (which can lead to an increase in wages for that department). Allocating monies to a department makes that department want to be more efficient with their money.
Budget managers can control the direction of the company by giving or not giving money to certain parts of the company. For instance, in an oil company, a budget manager might give a lot of money to the Exploration department to find new oil, but cut back on the Logistics department.
Budgeting is a great way to both force a company to run efficiently and to find out if they are actually doing it. If a department or region is consistently over-budget, they will need to be looked at as to why. If another region is consistently under-budget, maybe they are being allocated too many resources that could go somewhere else.
Wiki User
∙ 15y ago
Wiki User
∙ 11y agoTo keep expenditure balanced within income.
So you are not spending more than you are earning.
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A sum of money allocated for a particular purpose?
budget
What is primary disadvantage to having a total consumption budget?
With a total consumption budget, there is no net income or savings.
What is discretionary spending within a budget?
Money that can be used for any purpose
What is the primary disadvantage of having a total consumption budget?
there is no discretionary income
Are there countries without a budget deficit?
YES there are, BUT not having debts does NOT say that their economy is healthy or they are a superpower
What are functional budgets?
A functional budget is a budget that has a purpose and works well for the company or individual using the budget. Having a functional budget is important so finaces stay in order and are accurate.
What is the purpose of production budget?
purpose of production budget
What the purpose of financial management?
The purpose of financial management is to ensure that money is managed in the right manner. This includes having a budget and planning for how the funds received will be utilized.
What is the primary purpose of a cash budget?
The primary purpose of a cash budget is to limit spending. A cash budget can also help people track their spending.
What is the purpose of the national budget in the Philippines?
The purpose of the national budget in the Philippines is to help build roads and help the citizens.
What is an amount of money for a specific purpose?
Budget
What is the primary disadvantage to having to having a total consumption budget?
With a total consumption budget, there is no net income or savings.
What is the purpose of the sales budget report?
The purpose of the sales budget report is to ascertain what the year's budget status would have on the next year's anticipated budget. In order to anticipate what the next year's sales might be, one needs to find out what the last year's sales were.The purpose of the sales budget report is to help plan for the future. The budget can be used to control expenditure and increase revenue for the next financial year.
A sum of money allocated for a particular purpose?
budget
What is a sum of money allocated for a certain purpose?
Budget
What is the purpose of an Act having definitions?
What is a purpose of an act having definations
What is the purpose of budget CDs?
The purpose of budget CD's is simply to be able to purchase music for a low price. Most music stores have a selection of budget CD's. These are usually older releases or CD's that didn't sell as well as expected.
