Answer
Some major benefits from budgeting:
- Budgets communicate management’s plans throughout the
organization.
- Budgets force managers to think about and plan for the future.
- The budgeting process provides a means of allocating resources to the parts of the organization where they can be used most effectively.
- The budgeting process can uncover potential bottlenecks before they occur.
- Budgets coordinate the activities of the entire organization by integrating the plans of its various parts. Budgeting helps to ensure that everyone in the organization is pulling in the same direction.
- Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance.
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