As management accounting tools, budgets are internationally recognised for their role in planning of activities, and\n \n\n \n\n \n\n\n \n \n \n \n\n \nnot without challenges. The purpose of this study was to establish the extent of preparation and utilisation of budgets\nby SMEs in the manufacturing industry in the Cape Metropole, with a focus on identifying the challenges faced by these\nentities in using these management accounting tools. To this end the study pursued a descriptive research design,\ncollecting data from 108 owners/managers of SMEs in the manufacturing industry in the Cape Metropole. The data\nwas collected through a questionnaire which contained closed questions and Likert-scale questions. Data analysis\nwas conducted using SPSS version 24, and the results were presented through descriptive statistics in the form of\npercentages, means, standard deviations, graphs and tables. The results of the study show that close to 30 % of SMEs\nin the manufacturing industry in the Cape Metropole do not prepare budgets at all. Amongst the 70% who prepare\nbudgets, 67% face challenges in utilising budgets. Overall, only 23% of the surveyed SMEs prepare budgets and utilise\nthem without facing challenges.
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