... The budget therefore gives the departmental managers a guide to their conduct and a framework for evaluating the actual results. Hence, the company can compare the budget against the actual results and adjusted for any changes in the external environment. A rigid budget, which is blindly held on to, is often worse than no budget at all. Many budgets are flexible in that, by distinguishing between fixed and variable costs or revenues, schedules are prepared showing expected revenues and expenses at given levels of activity. In my point of view, the use of budgets can be seen to be advantageous for a number of reasons: 1. The preparation of budgets forces management to engage in planning, in looking forwards rather than backwards, thus is being prospective instead of retrospective. 2. Budgets provide a detailed means of controlling all income and expenditure of a business. 3. The need for capital can be ...

See this essay or coursework document in full right now