The main way in which budgets provide a means of control in an organisation is by:

Question

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Budgets provide a means of control in an organization by comparing actual performance with budgeted performance. This allows managers to identify variances and take corrective action if necessary to ensure that the organization is on track to meet its goals. Setting attainable budget targets (option A) is important for motivation and morale, and setting budget targets which will be difficult to attain (option D) can encourage employees to strive for excellence, but neither of these options is directly related to control. Senior managers controlling lower level managers (option B) is a form of bureaucratic control, which can be enabled by budgets but is not the primary means by which budgets provide control.

The Main Way in Which Budgets Provide a Means of Control