Disadvantages Of Budgetary Analysis

Budgetary control attributes to the way managers make use of budgets to oversee and authorize costs and activity in a certain period of time. It is basically the process of setting economical and work goals with budgets, comparison with the existing results and carrying out a performance that adapts to it. Future financial needs require an approximate calculation and orderly arrangement under budgetary control techniques. It is also used to manage the financial performance of the organization.

According to iedunote (2017), below are the strengths and weaknesses of Budgeting:

Another tool used in management accounting is the ratio analysis that is used to control in the clearance of primary functions of forecasting, devising, coordination,

The FIFO and LIFO methods fall under standard costing since it retains vast previous information on the costs which needs to be controlled for products in stock.

Advantages of Standard Costing:

• Helps in budgeting and inventory management – As an average cost is formed to help estimate. Standard costing also makes producing an period-end inventory report easier

• Forming a standard overhead – If concluding with actual costs takes too long, forming a standard overhead and adjusting it to the actual costs every now and then will help the organization.

• Price making – Standard costing assists in fixing prices according to consumer demands and adding a margin to it as well.

Disadvantages of Standard Costing:

• Unnecessary activities – Sometimes the management is forced to take inaccurate decisions and act on it just to create favorable variances.

• Accelerated environment – Standard costing assumes that the expenses do not suffer a drastic change quickly, however, if the product is short-lived in a particular environment, the standard cost may be of no use.

SWOT

SWOT analysis is a method used to identify strengths, weaknesses, threats and opportunities.

Below is the SWOT analysis of one of the most recognized fast food outlets called

Another area McDonalds could work at would include diversifying their products in connection to market demand and showing interest in expanding their business into the developing countries and internationally thus making them less prone to the effects of an economic decline. They could even reconstruct their outlets and use technology to promote themselves by introducing dedicated apps, online coupons and so on. McDonalds could also implement environmental friendly methods and products into their