Question

Differentiate between 'Method' and 'Budget' as types of plans.

Answer 1

Methods:

Methods can be defined as formalized or systematic way of doing routine or repetitive jobs. The managers decide in advance the common way of doing a job. So, that

(a) There is no doubt in the minds of employees;

(b) There can be uniformity in actions of the employees;

(c) These help in applying the techniques of standardization and simplification;

(d) Act as guide for employees.

If the common way of doing the job is not decided in advance then there will be confusion and comparison will not be possible.

Whereas,

Budget is the statement of expected result expressed in numerical terms. In budgets the results are always measurable and most of the time these are financial in nature but it does not mean that company prepares only financial budget. Financial budget is also known as profit plan of the company because it includes the expected income and related expenditures with that income and the profit which the company will earn in the coming year.