Many managers complain about the budgeting process. They claim it takes too long, requires too much management time, encourages managers to "pad the budget" because of uncertainties, and creates unnecessary tension among managers. As a result of these charges, some managers and business leaders have called for an abandonment of traditional budgeting practices. However, regardless of budgeting's failures, it continues to be widely used across all types of businesses and not-for-profit enterprises. One reason for the continued use of budgeting is the belief that a competent management team can plan for, manage, and control in large measure the relevant variables that dominate the life of a business. Managers must grapple with uncertainties regardless of whether or not they have a budget. a. Are the managers' complaints about the budgeting process Realistic or Unrealistic? O Realistic O Unrealistic b. Do these complaints create costs for organizations? O Yes O No

Many managers complain about the budgeting process. They claim it takes too long, requires too much management time, encourages managers to "pad the budget" because of uncertainties, and creates unnecessary tension among managers. As a result of these charges, some managers and business leaders have called for an abandonment of traditional budgeting practices. However, regardless of budgeting's failures, it continues to be widely used across all types of businesses and not-for-profit enterprises. One reason for the continued use of budgeting is the belief that a competent management team can plan for, manage, and control in large measure the relevant variables that dominate the life of a business. Managers must grapple with uncertainties regardless of whether or not they have a budget. a. Are the managers' complaints about the budgeting process Realistic or Unrealistic? O Realistic O Unrealistic b. Do these complaints create costs for organizations? O Yes O No

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Many managers complain about the budgeting process. They claim it takes too long, requires too much management time,
encourages managers to "pad the budget" because of uncertainties, and creates unnecessary tension among managers. As a result of
these charges, some managers and business leaders have called for an abandonment of traditional budgeting practices. However,
regardless of budgeting's failures, it continues to be widely used across all types of businesses and not-for-profit enterprises. One
reason for the continued use of budgeting is the belief that a competent management team can plan for, manage, and control in large
measure the relevant variables that dominate the life of a business. Managers must grapple with uncertainties regardless of whether or
not they have a budget.
1
Ask
a. Are the managers' complaints about the budgeting process Realistic or Unrealistic?
O Realistic
O Unrealistic
b. Do these complaints create costs for organizations?
O Yes
O No
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Graw
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4
When a company develops and implements a master budget, there is a tendency to incentivize adherence to the goal with bonuses or by tying the employee compensation plans to the achievement of the budget goals. What are some opportunities and risks of these financial incentive programs?
9
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Why do chief executives include intems in their budget that they do not fully support?
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem? Allowing employees the opportunity to be a part of the budget process Allowing goals to be so low that employees develop a "spend it or lose it" attitude Setting goals too tightly making it difficult to meet performance expectation Setting goals among managers that conflict with one another
Companies have found that offering discounts to customers in return for early payment can be counterproductive in terms of the resulting adverse effect on profitability. This is when the reduction in profitability outweighs any marginal improvements gained from the benefit of a reduction in the working capital requirement. Required: Critically evaluate the methods that can be adopted to manage and achieve the efficient control of inventories and gain the resulting benefits for improving cashflow and ultimately profit in a business.
Using accrual accounting to evaluate the performance of a manager may create conflicts with the use of DCF methods for capital budgeting. Frequently, the decision made using a DCF method will not report good “operating income” results in the project’s early years under accrual accounting. For this reason, managers are tempted to not use DCF methods even though the decisions based on them would be in the best interests of the company as a whole over the long run. True False: Using accrual accounting to evaluate the performance of a manager cannot create conflicts with the use of DCF methods for capital budgeting. False: Frequently, the decision made using a DCF method will report good “operating income” results in the project’s early years under accrual accounting. False: managers consistently use DCF methods even though the decisions based on them would be in the worst interests of the company as a whole over the long run. B, C, and D
Which of the following is not a benefit of participative budgeting? Multiple Choice It serves as training or development for managers. It provides information that employees know but managers do not. It reduces or eliminates the need for tracking actual cost activity. It enhances employee motivation and acceptance of goals.
"Budgetary slack" occurs when: Employees refuse to adhere to budgeted plans and operations. The budget is so difficult to meet that employees slack-off from work. An authoritative, or imposed, budgeting process is used. To "meet" budget objectives, employees ask for resources in excess of what they need. Employees ask for fewer resources than they need, in order to continuously improve.
IS THE STATEMENT CORRECT OR INC
“Budgeting is the same across different organisations and industries, so organisational strategy, industry and the broader goals and objectives of a business are not of much importance in the budgeting process”. Do you agree with this statement? Explain why or why not.