the budgeting process includes both short term and long term planning for an organizations performance to...
the budgeting process includes both short term and long term planning for an organizations performance to be effective. which one is more important to an organizations financial success?
Homework Answers
Answer: short-term planning is more important.
This is so because each budget is prepared for short span of time of future (suppose production budget of upcoming 6 months). If this is successful then only long term planning can be done (such as accumulation of profits in retained earnings can give a healthy financial success after 5 years). Therefore, emphasise should be given in each short-term budget so that the financial plans for future could be successful.
Such as direct material price variance is unfavorable today; this happens because actual price of material is higher than budgeted material price; this should be corrected immediately by applying bulk purchasing discounts. If this can’t be done future cash flows would be affected.
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the budgeting process includes both short term and
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