Budgeting as a Management Tool in Jools Furniture Free Essay Example, 5000 words

According to the research findings, it can, therefore, be said that budgeting is the process by which targets are set for goal attainment. It is described generally as the key to financial management and is used to monitor and control performance of various departments in the organisation. The functions of budgeting are numerous. BPP (1998) lists the functions of budgeting as: ensure the achievement of the organisation s objectivescompel planningcommunicate ideas and planscoordinate activitiesprovide a framework for responsibility accountingestablish a system of controlmotivate employees to improve their performance A master budget is very useful in linking the various departments in an organisation to organisational goals. Horngren states: The master budget summarises the financial projections of all the organisation s budgets and plans. It expresses management s comprehensive operating and financial plans the formalised outline of the organisation s financial objectives and thei r means of attainment. Budgets are tools that by themselves are neither good nor bad. How managers administer budgets is the key to their value. When administered wisely, budgets compel management planning, provide definite expectations that are an appropriate framework for judging subsequent performance, and promote communication and coordination among the various subunits of the organisation. There are many different styles of budgeting as there are different styles of management. We will write a custom essay sample on Budgeting as a Management Tool in Jools Furniture or any topic specifically for you Only $17.96 $11.86/pageorder now They include activity-based budgeting, zero-based budgeting, and Kaizen budgeting. Just to name a few. Zero-Based Budgeting (ZBB) starts from the premise that no costs or activities should be included in the plans for the coming budget period, for the sole reason that they were included in the costs or activities for the current or previous periods. Instead, everything that is to be included in the budget needs to be carefully considered and justified.