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

Financial analysis, are footnotes important in analysing ratios

are footnotes important in analysing ratios

What are implications of ownership rights by equity claims, What are the ma...

What are the main implications of ownership rights by equity claims? Ownership rights have two primary implications: a. First, equity holders can advantage by any raise in t

What are the time dimensions of the income statement, What are the time dim...

What are the time dimensions of the income statement, the balance sheet, and the statement of cash flows? Hint: Are they videos or still pictures?  Explain. Sol. The i

Theories of the term structure, There are two important term structur...

There are two important term structure theories related to the shapes of the yield curve. First is the Expectations Theory and the second is Market Segmentations

Why do corporations declare stock splits and stock dividends, What is the e...

What is the effect of stock (not cash) dividends and stock splits on the market price of common stock?  Why do corporations declare stock splits and stock dividends? Stock divi

A-credit, A-Credit is the highest credit grade existing as allotted to a bo...

A-Credit is the highest credit grade existing as allotted to a borrower by a lender. Lenders use a credit grading system to make the borrowers eligible. The more the borrower's cre

Explain the four fundamental rights of ownership, Explain the four fundamen...

Explain the four fundamental rights of ownership A shareholder, by virtue of being an owner, is generally entitled to four fundamental rights of ownership: 1. Claim on a sha

Primary market, Primary Market In an economy, at a given point of time, ...

Primary Market In an economy, at a given point of time, there will be people/entities called savers the surplus units, whose current income exceeds their current expenditure whi

How to calculate rate of return?, Illustration Consider a Rs.1,00...

Illustration Consider a Rs.1,000 par value bond whose current market price is Rs.850. The bond carries a coupon rate of 8% and has a maturity period of 9 years. Wha

What are the weaknesses of the traditional approach, What are the Weaknesse...

What are the Weaknesses of the traditional approach The traditional approach to the scope of finance function evolved during 1920s and 1930s and dominated academic during 40's

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