Budgeting

Course work #2 |

MSc Accounting |

Advanced Management Accounting |

Instructor: Michael Roofe |

Ian Morris ID#00076638 |

6/12/2015 |

Many people believe the budgeting process is wasteful and ineffective. They maintain that managers spend too much time focusing on budgeting mechanic and not enough on strategic issues. They believe that emphasis on the budgeting process causes managers to neglect more important matters, such as Taylor Industries, Inc; develops standard costs for all its direct materials, direct labour, and manufacturing overhead costs for pricing products, costing inventories, and evaluating the performance of purchasing and production managers. It updates standard costs whenever costs, prices, or rates changes by 3 percent or more. It also reviews eliminating non-value adding activities that waste resources. Critics of the budgeting process also maintain that the information and formats that managers use in budgets fail to communicate the short term business activities needed to achieve long-term goals.

Place yourself in the role of a company’s controller and search the Internet for articles on budgeting. Based on your research, prepare a memorandum to your company’s owner justifying the need for budgeting. Also suggest ways the budgeting process, the budgeting information, and the budgets themselves efficient, effective, and meaningful.

Introduction

Most businesses tend to fail because they lack the understanding of budgeting and the role it plays in the health of organisation. Without a proper budgeting plan owners will never know the reasons behind the failure. In economically uncertain times, many persons who are displaced from their jobs through redundancy start their own business to remain financially afloat. Many of these persons lack the proper skills in operating a business and to prepare a business plan which include qualitative and quantitative aspect of a business. One of the most important elements of the quantitative...