The purpose and nature of the budgeting process

A budget is a financial document used to project future income and expenses. For manufacturing, budget show the predict finance about the number and the estimate cost of all items which related in production such as: overhead cost, material, labor, revenue, expenses, assets, liabilities, etc. From these predictions, it can help company picturing out the future cost and profit. The budgeting process may be carried out by individuals or by companies to estimate whether the company can continue to operate with its projected income and expenses. Purpose and advantages Budgets play an important role in the manufacturing and production process because companies will allocate each production cost to products. Spending too much money on specific activities will raise individual product costs, requiring companies to charge consumers for inefficient operations[1]. There are seven main purpose of budget. Firstly, budget can ensure the achievement of organizational objectives and push organizational planning. The reason is that a performance budget is a strategic tool that enables a company to win the competitive game. Moreover, a budget is basically a money plan, outlining company financial goals. Having a budget, company can well establish and regulate funds, set and achieve company financial objectives, and make advance decisions as to how company want company finances to function well for company. The main idea in budgeting is for company to put aside a certain amount of money for expected as well as unexpected costs[2]. Moreover, it creates the communicate ideas and plans; and make sure the coordinate activities. Because operating budgets focusing on performance also help spur productivity and ensure that everyone is on the same page, strategically speaking. Another benefit of