Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 14, Problem 8Q
8. Ken Shilov, manager of the marketing department, tells you that “budgeting simply does not work.” He says that he made budgets for his employees and when he reprimanded them for failing to accomplish budget goals, he got unfounded excuses. Suggest how
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Students have asked these similar questions
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
Mc
Graw
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If 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.
A budget is most likely to be effective if
it is not used to evaluate a manager's performance.
employees and managers at the lower levels do not get involved in the budgeting process.
it is used to assess blame when things do not occur according to plans.
it has top management support.
Chapter 14 Solutions
Survey Of Accounting
Ch. 14 - Prob. 1QCh. 14 - Prob. 2QCh. 14 - 3.What are the three levels of planning? Explain...Ch. 14 - 4.What is the primary factor that distinguishes...Ch. 14 - 5.What is the advantage of using a perpetual...Ch. 14 - Prob. 6QCh. 14 - Prob. 7QCh. 14 - 8. Ken Shilov, manager of the marketing...Ch. 14 - Prob. 9QCh. 14 - 10.What is the normal starting point in developing...
Ch. 14 - 11. How does the level of inventory affect the...Ch. 14 - 12.What are the components of the cash budget?...Ch. 14 - 13.The primary reason for preparing a cash budget...Ch. 14 - 14.What information does the pro forma income...Ch. 14 - 15.How does the pro forma statement of cash flows...Ch. 14 - Exercise 7-1A Budget responsibility Teresa...Ch. 14 - Exercise 7-2A Preparing a sales budget Parliament...Ch. 14 - Prob. 3ECh. 14 - Exercise 7-4A Preparing sales budgets with...Ch. 14 - Exercise 7-5A Determining cash receipts from...Ch. 14 - Exercise 7-6A Using judgment in making a sales...Ch. 14 - Exercise 7-7A Preparing an inventory purchases...Ch. 14 - Exercise 7-8A Preparing a schedule of cash...Ch. 14 - Exercise 7-9A Determining the amount of expected...Ch. 14 - Exercise 7-10A Preparing inventory purchases...Ch. 14 - Exercise 7-11A Preparing a schedule of cash...Ch. 14 - Prob. 12ECh. 14 - Exercise 7-13A Preparing a cash budget The...Ch. 14 - Exercise 7-14A Determining amount to borrow and...Ch. 14 - Prob. 15ECh. 14 - Problem 7-16A Behavioral impact of budgeting...Ch. 14 - Prob. 17PCh. 14 - Problem 7-18A Preparing an inventory purchases...Ch. 14 - Prob. 19PCh. 14 - Problem 7-21A Preparing a cash budget Fayette...Ch. 14 - Prob. 21PCh. 14 - Problem 7-22A Preparing budgets with multiple...Ch. 14 - Problem 7-23A Preparing a master budget for retail...Ch. 14 - ATC 7-1 Business Applications Case Preparing and...Ch. 14 - ATC7-2 Group Assignment Master budget and pro...Ch. 14 - ATC 7-4 Writing Assignment Continuous budgeting...Ch. 14 - Ethical Dilemma Bad budget system or unethical...
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- Suppose that the vice president of sales is a particularly pessimistic individual. If you were in charge of developing the master budget, how, if at all, would you be influenced by this knowledge?arrow_forward1 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_forward19. 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_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_forwardIs it important for a company to follow a strict budget even though they may be experiencing phenomenal profits? Do you think that there will be a bias towards greed when creating the budget for this company? Explain. How does management greed influence budget decisions? Please consider each of the questions separately in this post. It is important for you to understand the value of the budget as a blueprint for the business – even in times of exceptional “good news”. It is also important to consider the role of greed within the budgeting process of the firm. Perhaps you might want to think about the budget as a communication to employees about what ownership and management believes is its focus. You might even want to see if any other of the exceptional “bad boys” in the business world were reflecting their greed even within their budgeting documents.arrow_forwardWhich of the following statements relating to budgeting is NOT true? a) A budget is a formal document that quantifies a company’s plans for achieving its goals. b) Budgets are useful in the control process because they provide a basis for evaluating performance. c) A bottom-up approach to budgeting involves substantial input from lower level managers. d) Most managers believe that budgeting is more successful when a top-down approach rather than a bottom-up approach is used.arrow_forward
- Which of the following statements is false? Select one: a. According to responsibility accounting, all managers should be held responsible for all asbects of the master budget. o b. Budgets helps uncover potential bottlenecks. c. Budgeting forces managers to think about and plan for the future. o d. One benefit of following a well-designed budgeting process is Improved performance evaluations. e. Budgeted cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period. Which of the following activities would be classified as a batch-level activity? Select one: a. none of the given answer. b. Designing a new product. c. Milling a part required for the final product. d. Setting up equipment. e. Training employees.arrow_forwardWhich of the following factors will most likely have a negative impact on a manager's motivation with regards to the budget? O The budget targets are challenging but attainable. O The manager's input was highly regarded throughout the budget vetting process. O The budget includes some budgetary slack. O The budget provides too little scope for managers to perform their dutics,arrow_forwardBudgets 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 anotherarrow_forward
- Which of the following statements are TRUE? 1. Responsibility accounting attempts to assign blame for problems to a specific manager. 11. One benefit of a budget is that it helps managers gather relevant information for improving future performance. III. Challenging budgets tend to motivate improved performance. IV. Controllability may be difficult to pinpoint because some costs are the result of the market, not the manager. a) I, III, and IV are true. b) I and IV are true c) II, III, and IV aregrue. d) All statements are truearrow_forwardShould a manager blame his subordinates if a budget target is not achieved? Explain briefly! Give a few lines answerarrow_forward4. The following are characteristics of an effective budget, EXCEPT: A. Goals should be attainable. В. Evaluations should be made carefully with opportunities to explain any failures. С. They should be properly applied to avoid negative effects. D. Customers affected by a budget should be consulted when it is prepared.arrow_forward
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