Exercise 7-1A Budget responsibility
Teresa Flanagan, the accountant, is a perfectionist. No one can do the job as well as she can. Indeed, she has found budget information provided by the various departments to be worthless. She must change everything they give her. She has to admit that her estimates have not always been accurate, but she shudders to think of what would happen if she used the information supplied by the marketing and operating departments. No one seems to care about accuracy. Indeed, some of the marketing staff have even become insulting. When Ms. Flanagan confronted one of the salespeople with the fact that he was behind in meeting his budgeted sales
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Write a short report suggesting how the budgeting process could be improved.
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Survey Of Accounting
- 19. Which of the following is false? (a) A budget is a financial plan for a period of time. (b) Budgeting and responsibility accounting are closely related. (c) Goal congruence means that managers of different departments often have competing objectives. (d) The budgeting process should have a significantly positive effect on a company's profit as compared with no budgeting at all.arrow_forwardCorrecting internal control weakness Each of the following situations has an internal control weakness. Jade Applications has decided that one way to cut costs in the upcoming year is to fire the external auditor. The business believes that the internal auditor should be able to efficiently monitor the company’s internal controls. In an effort to minimize the amount of paperwork, Ross Homes has decided that it will not keep copies of customer invoices related to sales revenue. Ross believes that this effort will minimize the amount of data storage the company will have to pay for. Elle Bee, a trusted employee for many years, has never taken a vacation. The owner believes that he’s lucky that she is so committed to her job. The Medicine Chest Company keeps a small petty cash fund to handle small cash transactions. Because no one wants to volunteer to be the custodian, the business manager has decided that all employees should have access to the petty cash. She figures that as long as…arrow_forward"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.arrow_forward
- Criticize the following quotation:“At our company, budgeted revenue is set so high andbudgeted expenses so low that no department can ever meetthe budget. This way, department managers can never relax;they are motivated to keep working harder no matter howwell they are already doing.”arrow_forward32. Which of the following statements about budget acceptance in an organization is true? Group of answer choices The most widely accepted budget by the organization is the one prepared by top management. Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process. The most widely accepted budget by the organization is the one prepared by the department heads. Budgets are hardly ever accepted by anyone except top management.arrow_forwardThe best that describes the top management's role in budgeting process is that top management 1. Should be involved only in the approval process 2. Lacks the detailed knowledge of the daily operations and should limit their involvement 3. Needs to be involved, including using the budget process to communicate goals 4. Needs to separate the budgeting process and business planning process into two separate processes O 1 O 2 3. O 4arrow_forward
- 1 i. Discuss the factors that are likely to cause managers to submit budget estimates of sales and costs that do not represent their best estimate or expectations of what will actually occur. ii. Suggest, as a budget accountant, what procedures you would advise in order to minimize the likelihood of such biased estimate arising.arrow_forwardMany 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 Mc Graw Prev 1 of…arrow_forwardIf a manager is not able to meet the budget and it has been ________________ , the manager can alwayssay that the budget was unreasonable or unrealistic to start with, and therefore was impossibleto meet.arrow_forward
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning