Budgeting Flashcards
1
Q
Explain one benefit of budgeting on a monthly basis.
A
Monthly budgeting allows management to quickly address adverse variances and trends (i.e. providing greater control) and to revise future months’ budgets and reset if necessary. This improves planning procedures and provides realistic targets for staff and management. If the budget period is too long then adverse trends may not be detected until significant financial damage has been incurred; too short and there is not enough time to reset plans and this may lead to reacting to minor variances.
