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

Constructing the binomial interest rate tree, The fundamental princip...

The fundamental principle is that when a tree is used to value an on-the-run issue, the resulting value should be arbitrage free i.e., it should be equal to the o

Define comparative advantage related to currency swap market, How does the ...

How does the theory of comparative advantage relate to the currency swap market? Answer:  Name recognition is very important in the international bond market. With no it, even a

Explain the significant feature of the wealth maximisation, Explain the sig...

Explain the significant feature of the wealth maximisation The significant feature of the wealth maximisation criterion is that it considers is that it considers both the quali

Rating scale, Rating denote an issuer's ability to respond to adverse...

Rating denote an issuer's ability to respond to adverse changes in circumstances and economic conditions. The rating scale is generally differentiated into variou

Show the advantages of adjusted discount rate, Q. Show the Advantages of ad...

Q. Show the Advantages of adjusted discount rate? Advantages:- (1) It is simple to understand and simple to calculate. (2) The risk premium rate comprised in the risk adj

Bond's capital gain yield, A 10-year, 12% semi-yearly coupon bond with a pa...

A 10-year, 12% semi-yearly coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,050. The bond sells for $1,050. (Suppose that the bond has just bee

What are assumptions of walters dividend model, Q. What are assumptions of ...

Q. What are assumptions of Walters dividend model? 1. Constant Return and Cost of Capital: - The Walter' model presume that the firm's rate of return and its cost of capital ar

Ansawar, explain the concept of working capital.what are the factors which ...

explain the concept of working capital.what are the factors which influence the working capital?

Case studies, •?Detailed information should form the part of your answer (W...

•?Detailed information should form the part of your answer (Word limit 150 to 200 words). Case let 1 This case provides the opportunity to match financing alternatives with the nee

Calculation of cost of capital, Q. Calculation of Cost of Capital? Calc...

Q. Calculation of Cost of Capital? Calculation of Cost of Capital: - Calculation of cost of capital includes: (A) Calculation of cost of specific sources of finance (B) C

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