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3.4 Advantages of Budgeting

The following are the advantages of budgeting:

a) Budgeting leads to maximum utilisation of resources with a view to ensuring maximum return.

b) Budgeting increases the awareness about business enterprise at all levels of management in the process of fulfillment of targets.

c) Budgeting is helpful in better co-ordination between different functions/activities of business/organisation and hence, better understanding between different functions.

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d) Budgeting is a process of self-examination and self-criticism which is essential for the success of any organisation.

e) Budgeting makes a path for active participation and support of top management.

f) Budgeting enables the organisation to prefix its goals and push up the forces towards their achievements.

g) Budgeting stimulates the effective use of resources and creates an attitude of cost consciousness throughout the organisation.

h) It creates the bases for measuring performances of different departments as well as different functions of the production activities.

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