THE IMPACT OF BUDGETARY CONTROL ON THE PROFITABILITY OF AN ORGANIZATION

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THE IMPACT OF BUDGETARY CONTROL ON THE PROFITABILITY OF AN ORGANIZATION

LITERATURE REVIEW

2.1     INTRODUCTION
          The budget serves as a vehicle through which the actions of the different parts of an organization can be brought together and reconciled into a common plan.  All organization whether economic, social or political make plans for the future.
Organization and companies have limited resources and these scarce resources impose limits on the number, extent and range of end-result in the organization .
Set out to achieve “common organizational goals include maximization of profit or achieving satisfactory levels of performance (profit satisfaction) according to copelanct and descher (1979), achieving to continual growth or ensuring the survival of the organization, avoiding risk in making investment and perform a social services desired by others.  It is with a view of achieving their organizational goals that creak emphasis on budgeting.  Budgeting is essentially a process of planning and control.  A well prepared budget provides management with a planned programme based upon investigation, study and research on the part of the entire organization. Hence, a budget serves to bring together the separate plans of different departments in an organization and provides means of co-ordinating the marketing, production and   financial activities of the organization.  If an organization is to function effectively, there must be definite lines of communication so that all the parts will be kept fully informed of the plans and the policies, and constraints, to which the organization is expected to conform

    1. DEFINITION OF BUDGET

According to the chartered institute of management Accountants, (CMA) budget is defined as “a plan quantified in monetary terms, prepared prior to a defined period of time usually showing planned income to be generated and expenditure to be incurred during that period and the capital to be employed to attain a give obejctive’.

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THE IMPACT OF BUDGETARY CONTROL ON THE PROFITABILITY OF AN ORGANIZATION

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