Each department in the organization comes up with their own budget which is a monetary representation of their goals and objectives.
The planned revenue, expenditure and capital requirements are integrated.
A budget acts as a standard against which actual performance can be measured.
Budgetary planning helps in linking the strategic plans with the operational plans.
The strategic plans are long term plans that state where the organization should be going.
Without quantification the plans would just be a vague indicator of the direction in which the organization wants to move.
A budget can be considered as a plan in monetary terms.2) Write a 750 word brief essay integrating aspects of the module with at least three external sources to support your position about whether you agree or disagree with the following statement: 'Budgeting is a key component in management short and long term planning.' The following data is available from the various functional budgets prepared at Congo Limited.Planning may be defined as, 'a process of setting goals, developing strategies, and outlining tasks and schedules to accomplish their goals.' Planning is an important activity as it gives the organization direction and this will give managers specific targets which they will try to achieve.Each department head will keep his interests above the interests of the organization as a whole.It integrates the plans of various departments and ensures that all the departments work together for the growth of the organization.Here we have taken into consideration the manufacturing unit of Buccaneers Ltd. Below mentioned is the classification of costs based on information related to Buccaneers Ltd (Farr, 2011).Before going to the types of cost let us understand what cost actually is.Budgeting plays an important role in integrating the whole organization and that is one of the main reasons why budgeting is so important.Various departments will come up with various budgets.The word cost denotes the real amount of money that a company spends on the creation of goods and services which include expenditure on raw materials, equipments, supplies, services, labour, products, etc.Cost is mainly classified into three main elements: Thus, total of direct costs are known as Prime Cost and Product cost is the summation of Prime Cost and Overheads, Product Cost = Prime Cost Overheads.