Question

explain the role of budgets and performance reports in planning and control?

plz make it simple

Answer 1

Budgets refers to estimating the revenue and cost for future period. Performance report refers to comparing the actual data with budgets prepared. Performance report reflects how company has performed that is whether company has been able to achieve its budget. Budget and performance report helps company is planning and control of costs for its future period by way of decreasing costs, maximizing revenue or maximizing profits. When company prepares its performance report, it is aware of the fact of the reason for increase in cost or decrease in revenue. In which case company can implement plan for better performance for coming year and also control unnecessary wastes or cost identified in the performance report.