Boulders Manufacturing has just hired a new controller, Delado. During his first week on the job, Delado was asked to establish a budget for operating expenses in 2020. Since Delgado was not yet familiar with the operations of Boulder Manufacturing, he decided to budget these expenses using the same procedures as the prior controller. Therefore, in order to establish a budget for operating expenses, Delgado started with actual operating expenses incurred in 2019 and added 4.3 percent. Delgado based this percentage on inflation as measured by the consumer price index. Please comment on the effectiveness of Diana’s budgeting strategy. "budgeting chapter", what budget is to come to your mind as the "starting point" in preparing the master budget? What may result if this budget is inaccurate?
Boulders Manufacturing has just hired a new controller, Delado. During his first week on the job, Delado was asked to establish a budget for operating expenses in 2020.
Since Delgado was not yet familiar with the operations of Boulder Manufacturing, he decided to budget these expenses using the same procedures as the prior controller.
Therefore, in order to establish a budget for operating expenses, Delgado started with actual operating expenses incurred in 2019 and added 4.3 percent. Delgado based this percentage on inflation as measured by the consumer price index.
Please comment on the effectiveness of Diana’s budgeting strategy.
"budgeting chapter", what budget is to come to your mind as the "starting point" in preparing the
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