![]() ![]() ![]() This budget control helps in achieving a desired level of EBITDA – Earnings before Interest, Tax, Depreciation, and Amortization. Usually, firms compare the performance of this budget with the actual performance on a monthly basis since a monthly comparison enables the organization to take corrective actions in a more timely manner. This budget control is important for running the day-to-day operations of the firm smoothly. ![]() Operating budget control covers the revenues and operating expenses of the firm. There are various types of budget controls that an organization can implement. Thus, the company may decide to increase its workforce by a certain percentage so as to achieve the desired increase in sales.Īlso, read Why is Budgeting important? Types of Budget Control So, the company takes corrective action in order to improve the performance of underperforming operations. E.g., the company may find out that the sales didn’t increase by 12% because of the shortage of workforce faced by the sales team. Third, the company analyses the reasons for the deviation in the actual performance and takes corrective actions. E.g., the company may find out that the budget goal was to increase the sales by 12%, but the sales increased by only 7%. The goal is to find out to what extent the actual performance is in line with the budgeted performance and to what extent is the performance off-track. Second, when a company gets the actual performance results, the management compares it with the performance/standards set in the budget. Or the goal may be to cut down the labor costs by 5% this year. the goal may be to increase sales by 12% this year. This budget is simply a set of financial goals that the management wants to achieve. ![]()
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