There is an inherent conflict when budgets are used for both planning and control.

Question

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Budgets are created to plan and set targets for an organization. However, they are also used as a control mechanism to monitor actual performance against those targets. This can create a conflict between the two objectives - planning and control. Planning requires flexibility and the ability to adjust to changing circumstances, whereas control requires sticking to budgeted targets. This conflict can lead to managers prioritizing control over planning or vice versa, which can negatively impact the overall performance of the organization.

There Is an Inherent Conflict When Budgets Are Used for Both