A. A budget provides criteria against which to measure performance during the upcoming period. Therefore, it does provide a formal benchmark to be used for feedback and performance evaluation, and that is an advantage of budgeting.
B. One of the advantages of a budget is that it forces management to evaluate the reasonableness of assumptions used in the budgetary process and goals that have been set.
C. The budget communicates and authorizes actions and also promotes coordination within an organization. This is an advantage of a budget.
D. A budget is a realistic plan for the future expressed in quantitative terms. A budget is a very useful tool and can serve as a tool in a number of areas: planning, control, evaluation, motivation, communication, identifying future problems. Developing a budget is an important step in the process of control. However, a formal budgetary process alone will not ensure improved cost control or prevent inefficiencies. After the budget has been developed, it must be used as a tool by management to accomplish those objectives.
