Budget center – meaning

A budget center is a section of the organization of the undertaking defined for the purpose of budget control. Budget centers should be established for cost control and all the budgets should be related to cost centers. Budget centers will disclose the sections of the organization where planned performance is not achieved. The budget center must be separately delimited because a separate budget has to be set with the help of the head of the department concerned. To illustrate, the production manager has to be consulted for the preparation of the production budget and finance manager for the cash budget.

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