Discuss the role played and purpose of budgets. Give examples

budgets are a great tool to implement controls in an organization, comparing the budgeted amounts against the actual amounts utilised can be used to analyse where the over-use /under-usage arose from and necessary measures can be taken against the same or to promote the same in a positive scenario

Actually we could consider the budget as a multiple steps assessment toward entity goal as we have the master budget that  we set at the beginning of the year and a flexible budget which is a reconciliation or updating our budget by the units of sales achieved as it is the only factor considered to be out of hand to a broad range. so by evaluating we could identify variance and analyze to know it's root cause and ways to avoid it's impact at the future. As an example by analyze material quantity variance we could identify material quality problem.