Final answer:
The operating budget may not accurately reflect actual expenses or capture all costs and benefits. It can lead to a short-term focus and not consider long-term strategic planning.
Step-by-step explanation:
The operating budget can have some drawbacks as a control device. One drawback is that it may not always accurately reflect actual expenses or revenues. For example, unexpected events or changes in the market can occur that were not included in the budget.
This can lead to inaccurate financial projections and decision-making. Another drawback is that the operating budget may not effectively capture all costs and benefits associated with a particular project or initiative. It may only focus on direct expenses and revenues, and not consider indirect costs or intangible benefits.
Lastly, using the operating budget as a control device can sometimes lead to a short-term focus at the expense of long-term strategic planning. Managers may make decisions solely based on the immediate budgetary implications, without considering the long-term impact on the organization's goals and objectives.