Utilities of Budget :
(i) Sound Planning : Budget make planning purposeful and precise. Objectives and progammes are expressed in physical or monetary units in budgets. Budgets are prepared on the basis of forecasts. Therefore, budgets force managers to think about the future.
(ii) Higher efficiency : Budget bring efficiency and economy in the working of a business firm. They help management in obtaining the most profitable combination of different factors of production.
(iii) Sense of responsibility : Budget puts a sense of responsibility on the shoulders of management. Budget motivates them to act responsibly and escape from extravagance by which they can take decisions to attain the set targets.
(iv) Source of Motivation : Budget represents the 'milestones' to be reached. It tells the management what efforts and results are expected. Budgets become the goals or targets to be attained. It motivates them to work hard in order to achieve the target represented by the budget.
(v) Coordination: Budgets force executives to think as a group. Therefore, they help in achieving co-ordination between different departments of the enterprise. It is possible to fix the divisional or departmental target so that all divisions or departments may work harmoniously.
(vi) Delegation of authority : Budgets allow delegation of authority without loss of control. It permits participation of employees at all levels. Reduction of plans to definite numbers, forces a kind of orderliness that permits the managers to see clearly what capital will be spent by whom, and where, and what expense, revenue or units of physical input or output his plans will involve. Having ascertained this, the manager can more freely delegate authority to effect the paln within the limits of the budget. Budgeting is somewhat a democratic way of managing.
(vii) Effective control : Budgets are an important tool of managerial control. Use of budgets for evaluation and control of performance is known as 'budgetary control'. Budgetary control facilities 'control by exception' by focussing attention on deviations from budgeted targets. Budgets provide exact standars with which actual results can be evaluated and variations between actual performance and budgetary targets can be analysed.