Objectives of budgetary control system
The following are the objectives of a budgetary control system:1. Planning. A budget provides a detailed plan of action for a business over a definite period of time. Detailed plans relating to production, sales, raw material requirements, labor needs, advertising and sales promotion performance, research and development activities, capital additions etc. are drawn up. By planning many problems are anticipated long before they arise and
solutions can be sought through careful study. Thus most business emergencies can be avoided by planning. In brief, budgeting forces the management to think ahead, to anticipate and prepare for the anticipated conditions.
2. Coordination. Budgeting aids managers in co-coordinating their efforts so that objectives of the organization as a whole harmonize with the objectives of its divisions. Effective planning and organization contributes a lot in achieving coordination. There should be co-ordination in the budgets of various departments. For example, the budget of sales should be in coordination with the budget of production. Similarly, production budget should be prepared in co-ordination with the purchase budget, and so on.
3. Communication. A budget is actually a communication device. The accepted budget copies are distributed to every management personnel which gives not only adequate understanding and knowledge of the policies and programmes to be followed however also gives understanding about the restrictions to be followed to. It is not the budget by itself that facilitates communication; however the vital information will be communicated in the work of preparing budgets and participation of most responsible men and women in this act.
4. Motivation. A budget is a helpful device for encouraging managers to carry out in line with the organization objectives. If men and women have actively participated in the planning of budgets, it acts like a strong motivating force in order to achieve the targets.