Reasons for setting budgets and problems of setting budgets

Question 1

Why businesses use budgets (4)

Answer 1

measure whether key targets and objectives are being achieved.
to control expenditure
provide sense of direction
monitor actual results against budget

Question 2

Expenditure Budget: (10)

Answer 2

costs of premises 
staff costs
energy costs
other location
equipment costs
marketing 
commissions and royalties 
travel & subsistence costs
legal and professional charges
company formation costs

Question 3

Limitations: (4)

Answer 3

based on estimates and assumptions
start-ups have no trading history
setting and monitoring budgets takes time
limited motivational effect