Title:
Effect of Budgeting Practices on the Financial Performance of Medium Manufacturing Companies in Mwanza City, Tanzania

Authors:
Auson Vedasto, Dr. Kaihula P. Bishagazi & Dr. Gerry Batonda, Tanzania

Abstract:

This study examined the effect of budgeting practices on the financial performance of medium manufacturing companies in Mwanza City, Tanzania. Guided by the Contingency Theory of Management Accounting, the study analyzed how participatory budgeting, rolling forecasting, and activity-based budgeting (ABB) influence profitability, liquidity, and operational efficiency. Quantitative data were collected from 128 respondents across 44 manufacturing firms using structured questionnaires. Descriptive statistics, correlation, and multiple regression analysis were conducted using SPSS version 26. Findings indicated that all three budgeting practices positively and significantly affect financial performance (p < 0.05). ABB exhibited the strongest influence, followed by participatory budgeting and rolling forecasts. The regression model accounted for 64.8% of the variance in financial performance. The study concludes that participatory budgeting enhances ownership, rolling forecasts improve adaptability, and ABB strengthens cost management. It recommends institutional adoption of modern budgeting tools and capacity-building initiatives for improved financial planning and performance.

DOI: https://doi.org/10.51505/IJEBMR.2025.91213