ACC 406 Chapter Notes - Chapter 9: Direct Labor Cost, Budget, Earnings Before Interest And Taxes
Document Summary
Can be used to adjust the budget, looking forward once more: budgets = financial plans for the future, key component of planning, strategic plan = identifies strategies for future activities and. Identify objectives and the actions needed to achieve them operations, generally covering at least 5 years. Organization can translate overall strategy into long and short- term objectives: these objectives form the basis of the budget, advantages of budgeting. 1) it forces managers to plan: encourages managers to develop an overall direction for the organization, foresee problems, and develop future policies. 2) it provides information that can be used to improve decision making. 3) it provides a standard for performance evaluation: control is achieved by comparing actual results with budgeted results on a periodic basis. As a month expires in the budget, an additional month in the future is added so that the company always has a 12-month plan on hand: directing and coordinating.
