Mwaiseni Plc a chain stores organization has several branches in all the ten provincial headquarters in Zambia. Each branch has a manager who reports directly to the General Manager whose office is in Lusaka. Since 1991, each branch manager prepares a budget as part of the company’s annual budgeting process. You have just been appointed as General Manager and you are concerned about the validity of these annual budgets. You feel that the branch managers will overstate their costs and resource requirements in order to make it easier for them to achieve their budget targets. Required: -Explain the differences between the above annual budgeting system and a rolling budget system. - Describe the problems that could arise, for planning and decision making purposes within Mwaiseni, if the branch managers did overstate their budgeted costs and resource requirements. - Discuss the behavioural issues that could arise if excess costs and resources are removed from the branch managers’ budgets.
Question Two
Mwaiseni Plc a chain stores organization has several branches in all the ten provincial headquarters in Zambia. Each branch has a manager who reports directly to the General Manager whose office is in Lusaka.
Since 1991, each branch manager prepares a budget as part of the company’s annual budgeting process. You have just been appointed as General Manager and you are concerned about the validity of these annual budgets. You feel that the branch managers will overstate their costs and resource requirements in order to make it easier for them to achieve their budget targets.
Required:
-Explain the differences between the above annual budgeting system and a rolling budget system.
- Describe the problems that could arise, for planning and decision making purposes within Mwaiseni, if the branch managers did overstate their budgeted costs and resource requirements.
- Discuss the behavioural issues that could arise if excess costs and resources are removed from the branch managers’ budgets.
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