Comparison and Contrast of Planning Tools in Management Accounting

Management accounting
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TASK 3
P4 Comparison and contrast three planning tools used in management accounting
Planning tool: Business cooperation’s only get success when they maintain long term
sustainability for this purpose they plan policies, tools and techniques used for planning, these tool s
knows as planning tools of management accounting. Following are the types of planning tool
1. Budgetary planning tool: Theses tools are used for formulation of budget. There will be
various types of budgetary techniques has been used which are describe below
Activity based budgeting: In this type of budgeting method mangers prepared budget by
allocation of resources in systematic way.
Advantage
Excite Entertainment Ltd uses this method through which resource utilized in proper way.
It provides accurate information for future.
Disadvantage
It requires high cost.
It is time consuming procedure.
Zero based budgeting: In that type of budgeting, business organization formulate budget on
the basis of deep research and start from zero level (Huang, Yu, Peng, Z. and Zhao, 2015).
Advantage
It is beneficial for small business organizations.
It used for getting reliable information.
Disadvantage
It required time for starting fro initial level
It is complex method of budgeting.
Rolling budget: In these types of planning tool, budget is prepared on the basis of short time
period and for continuous business purpose.
Advantage
It useful for Excite Entertainment Ltd to reduce of errors.
Help in increasing productivity level and reduce standard and actual deviation of actions.
2. Strategic planning tool: Theses types of budgeting tools are apply in organization to plan for
future business policies on the basis of scanning the environment. For this purpose, SWOT,
Pestle, balance score card technique is used. With the use of SWOT analysis, mangers identify the
strength, weakness opportunities of the business environment. And Pestle, balance scorecard
technique use to recognized effect of external environment.
Advantage
Strategic planning tools help in finding best opportunities and provide guideline for Excite
Entertainment Ltd to make future policies.
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