1.
Discuss the relationship between the management functions of planning and controlling
costs . Explain the benefits of using a budgeting process and how flexible budgets can assist
in decision making.
Solution
planning and controlling are two seperate function of management though closely
related.Planning is a basic managerial function which involves deciding on course of action in
advance.
Though planning preside controlling ,plans are not self achieve. controlling is a procedure for
measuring performance against objects or plans. thus planning and controlling are two
interrelated functions.
2)Benefits of budgeting process:
a)provides standards against which actual performance are measured.
b)Allows managers to reassess goals and objectives and the means for accomplishing them.
c)Improves top management ability's to coordinate the overall operation of organisation
d)Assist managers in recognizing when change is needed.
3)Flexible budget enables management to gain an overall indication of profit stability or
instability in relation to change in revenue and cost ,giving rise to a feeling of "being more in
control'when making decisions.
Thus flexible budget provides a range of sales revenue and profit at different level of outputs so
that manager can identify that area that require greater attention for a given decision.