Budgeting Comments

Exercise 6-13 – Revised) Select one of the following quotes from the text to discuss. Clearly state whether you either agree or disagree with the comment and support your opinion with at least one scholarly resource.  Include in your response an explanation of the major purposes of budgeting.  Your initial post should be 250 words.

  • “One major criticism of budgeting is that it is used as a ‘cost reduction’ tool rather than a ‘cost control’ tool.  The objective of the budget is to control costs at an efficient level of operation.”
  • “There are generally three benefits from allowing employees to participate in developing the budget:  (1) Employees tend to accept the budget as their own plan of action.  (2) Participation tends to increase morale among employees and toward management.  (3) Employee cohesiveness is increased, and productivity will also increase if dictated by the group norm.”
  • “Even though budgets are quantitative tools, considerable emotion is connected to budgeting.  The individual in control often sees the budget as a means of getting things done.  People being controlled often have feelings of anxiety because their success and promotion are tied directly to the budget.”

Text is Managerial accounting: Decision making for the service and manufacturing sectors

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preview of the answer..

Companies design the budgeting system as a tool that contains elements that show how forecasted revenues and expenditures of the business entity are used within a specific period. The two main key purposes of budgeting are planning and control. As a planning tool budgeting can aid the organization to determine the direction of its activities for the specified period in the budget. A budget converts the company’s goal and objectives into tangible and achievable ones …

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