THE INSTITUTE OF FINANCE MANAGEMENT
FACULITY OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
BACHELOR IN ACCOUNTING III.
ACADEMIC YEAR 2024/2025
SUBJECT: PERFOMANCE MANAGEMENT
CODE: ACU 08212
SUBMISION DATE: 05th May, 2025
GROUP ASSIGNMENT
SUPERVISOR: MS MAGAMBO, E
S/NO NAME REG, NUMBER SIGNATURE
1. ISRAEL KENED MZA/BAC/222151
2. MARY NGAJILO MZA/BAC/2212817
3. BAHATI DEUS MZA/BAC/2226199
4. ADELINA MAHANGA MZA/BAC/2113202
5 FROLA JOHN MZA/BAC/2215923
6 SITURIDA SANGA MZA/BAC/2213732
7 AGNETHA MWABENA MZA/BAC/2212602
8 NICE SHIRIMA MZA/BAC/2213829
9 KULWA NDONGO MZA/BAC/2224080
QN; Define Budgetary Control and explain its function
Budgetary control; is a process of managing an organization financial resource and preparing
budget for a different activity, comparing the actual result with the planned budget and taking
corrective action when the difference occurs. its main objective is to ensure the organization
stays on track to achieve financial and operational goals
Functions of Budgetary Control:
1. Setting Financial Goals
The Budgetary control helps management to set its clear financial objectives for the
organization. These goals involve targets for revenue, profits, expenses, production costs, and
cash flows in or out the organization. through setting these targets at beginning of the period, like
a year, the company will understand what it wants to achieve.
Example: the business may set a goal to increase sales by 20% or reduce operating costs by 3%
within one year.
2. Performance Evaluation
This is one of the functions of budgetary control as it allows managers to evaluate how various
employees or department are performing their duties this can be done by comparing the actual
performance with what budgeted, and this helps management to identify areas where
performance is better or less than expected. This helps reward good performance and improve
weak areas.
Example: If the sales department expected to sell 2000 units but sold 2800 units. they performed
above target and they can be rewarded according to the organization culture. But when they sold
only 900 units, managers can investigate and determine the reason and make improvements.
3. Communication
A budget acts as a tool for communicate the expectations and plans of top management to all
departments and employees. When the budget is communicated, everyone in the organization
will understands what expected of them. This improves teamwork among employees and
department because they know how their activities fit into the company plan.
Example: if the finance department will communicate how much money is available for
marketing, production, and salaries every team will knows their limit.
4. Resource Allocation
Budgetary control assist management to decide how to allocate scarce resources this includes
money, time, and manpower efficiently between different projects and departments this helps to
ensures that resources are used effectively where they are needed and can generate the highest
profit.
Example: Management can make a decision to spend more money to a profitable product line
and reduce spending on the less profitable activities
5. Motivate Employees
Budgets motivate employees by setting achievable and clear plans or target. When employees
know and understand what is expected and the resources to meet their targets are provided, they
encouraged to work harder. Sometimes, organizations provide bonuses and rewards to budget
achievements, which may increase motivation.
Example: A company may promise a reward or bonus to the sales team if they will exceed the
sales target set in the budget.
6. Control
Control is one of the important functions of budgetary control in an organization. It means
monitoring the actual activities to make sure they are within the planned budget. If cash outflow
is too high and income is too low management can take immediate corrective action to bring the
performance back on track.
Example: If the marketing department spends more money than what budgeted, the finance team
can limit future spending or can adjust other costs to balance it.
7. Coordination
Budgetary control helps to coordinate the activities within different departments so that they
work together smoothly towards the same overall goals and objectives. When each department
knows and understand its budget and how it links to other departments, it leads to less conflict
and better cooperation.
Example: The production department want to know the sales forecast so they can produce the
needed number of products. If sales expect to sell 15,000 units, production should prepare
materials and Labor for 15,000 units and not more or less.
REFERENCE
National Board of Accountants and Auditors (NBAA). (2019). Performance management (B5):
An intermediate level study text. NBAA.
Drury, C. (2018). Management and cost accounting (10th ed.). Cengage Learning.
Atrill, P., & McLaney, E. (2019). Management accounting for decision makers (9th ed.).
Pearson.
