ACC 312 Study Guide - Midterm Guide: Gross Margin, Internal Audit, Profit Center
Document Summary
The many uses of budgeting may be summarised as follows: A system for optimal allocation of scarce resources, A yardstick for performance, better than past performance, since conditions may have changed, People participation to provide motivation for improved performance and alignment of individual and corporate goals, improved communication to enable co-ordination of various parts of the business and so avoid sub optimization, Thinking ahead to achieve long-term goals and identify short-term problems, A system of authorisation and for clear identification of responsibility, internal audit by evaluating efficiency and effectiveness of departmental performance for prompt remedial action as necessary, A system of control and management by exception reporting. Prior to budget preparation, targets may be issued, for example, for: Actual departmental results may then be regularly reported against control budgets that have had full acceptance by the relevant managers and based on up to date and realistic standards of performance.
