_ control begins with an estimate of sales and expected income.
options:
a) Budgetary
b) Bureaucratic
c) Feedforward control
d) Operator control
e) Concurrent control
The correct answer and explanation is:
The correct answer is a) Budgetary control.
Budgetary control is a process that begins with an estimate of sales and expected income. It involves setting financial targets and comparing actual performance against those targets to identify any variances. The budget is a plan that outlines expected income, expenses, and profits, serving as a financial blueprint for an organization. By estimating sales and income, businesses can allocate resources effectively and plan for potential financial outcomes.
In budgetary control, management starts by forecasting the sales figures, which are often based on historical data, market trends, and other predictive factors. These projections help determine the income expected over a certain period. Once these estimates are made, budgets are developed for various departments and activities within the organization.
The purpose of budgetary control is to ensure that the organization stays within its financial means and achieves its financial goals. It allows management to track actual performance, compare it with the planned budget, and adjust strategies when there are significant deviations. For example, if actual sales fall below budgeted levels, corrective actions can be taken, such as reducing costs or adjusting marketing strategies to boost sales.
Budgetary control also provides a means of accountability by assigning responsibility to departments or individuals for managing specific aspects of the budget. It encourages employees and managers to focus on financial discipline, planning, and achieving cost-effective operations. Furthermore, budgetary control enables organizations to anticipate financial shortfalls or excesses, helping with long-term planning and decision-making.
In summary, budgetary control is a proactive approach that begins with an estimate of sales and expected income. It guides decision-making and performance evaluation, ensuring that resources are used efficiently and organizational goals are met.