Managing Finance Essay Example | Topics and Well Written Essays - 1000 words - 1

Managing Finance - Essay Example figureary rule and costing processes have been combined to compute variance between budgetary standards and the actual performances. The basic subject is to make adjustments, rectifications, and additions to budgetary control process to attain the set standards and objectivities. Variance compend fulfills this role in spite of appearance organizations. In combined standard costing and budgetary control system, variances can be calculated on either an absorption costing basis or marginal costing basis.(Michael Broadbent and others, page 151) . Variance analysis is the most important feature of budgetary control, and it is this process that establishes the creditability of the budgeting system. Technically speaking, budgeting plays the role of internal controls that have been make compulsory to install and evaluate under statutes like Sarbanes Oxley Act in the US in the moment of accounting scandals like Enron. Therefore, budgetary controls are not only strategically important for an organization, but similarly socially and morally important for safeguarding the interests of stakeholders.Budgets motivate the organizational system to achieve the laid down objectives. Budgetary control is a constructive exercise to create indigence in the organization. In fact the motivation of a budgetee (a manager working in a budget system) is split into two components the relevance of budget standards to the budgeters task, and the attitude of the budgetee towards the system.(G.H.Hofstede, page 3)