Performance budget, Financial Management

Assignment Help:

Performance budget: it involves evaluation of the performance of the organization in the context of both overall and specific objectives of the organization. As per the National Institute of Bank Management, performance budgeting is the procedure of identifying, analyzing, simplifying and crystallizing particular performance objectives of a job to be achieved over a period in the frame work of the organizational objectives, the idea and the objectives of the job. Performance budgeting needs preparation of performance reports which compare the actual data and budget and demonstrate the variances existing between both. The responsibility for preparing these reports lies with the respective departmental head.  Every departmental head will be supplied with a copy of the section of the master budget suitable to his sphere.  This report may be prepared regularly, every week, month or any basis based on the size of business and the budget period.  The reason of submitting these reports is to convey promptly the information about the deviations in actual and budgeted activity to the decision makers so that necessary corrective actions can be taken to correct the deviations.

Several ADVANTAGES of Performance budgeting is as follows:

  • It aims at constant growth of the organization in the long run.
  • It facilitates the organization to be sensitive and adaptive, preventing it from developing rigidities, which may retard the process of growth.
  • It aids performance appraisal

Fundamentals for a successful adoption of Performance budgeting are:

  • It necessitates preparation of periodic performance reports.

       • The accounting system should be suitably detailed and co-ordinate to offer necessary data for reports designed for the particular use of the individual or cost centers having primary responsibility for specific costs.


Related Discussions:- Performance budget

Use of beta to partition risk, Use of Beta to Partition Risk The total ...

Use of Beta to Partition Risk The total risk or variability in earnings can be attributed to two classes of factors: Marketwide factors which create variability in all

Define cash management, Cash Management: - Cash management comprises mainta...

Cash Management: - Cash management comprises maintaining optimum cash balance and efficient collection and disbursement of cash. Methods or else Devices of Cash Management: - Th

Agency relationship, Solutions to shareholders and government agency proble...

Solutions to shareholders and government agency problemquestion #Minimum 100 words accepted#

Estimating the market value of a share, Estimating the market value of a sh...

Estimating the market value of a share The dividend expansion model suggests a method whereby share values can be estimated from information on the required return on equity an

What are the reasons why organisations grow, What are the Reasons why organ...

What are the Reasons why organisations grow Required to provide higher financial returns to investors e.g. increases the wealth of shareholders Possible to achieve econ

Advantages and disadvantages of pay back period, Advantages: It is ...

Advantages: It is easy to calculate and catch. With the help of this technique, projects can be ranked in terms of their economic merits without much of complication.

Calculate the amplitude of the dc component, Calculate the amplitude of the...

Calculate the amplitude of the DC component: A periodic voltage consists of sinusoidal pulses having an amplitude of 150 V (SEE DIAGRAM BELOW). Use Fourier Series Expansion to

Preferred stock, Preferred Stock This is a category of capital stock th...

Preferred Stock This is a category of capital stock that will gives its holders preference  over common stockholders in the distribution  of earnings  or rights to the assets o

What is suspension of payments, Is it possible for a company with a positiv...

Is it possible for a company with a positive net income and which does not distribute dividends to find itself in suspension of payments?  Yes. A lot of companies which entered

Determine the limitations of the traditional approach, Determine the Limita...

Determine the Limitations of the traditional approach Limitations of the traditional approach were not entirely based on treatment or emphasis of different aspects. In other wo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd