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    Characteristics of budgets

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    You recently attended a workshop on budgeting and overheard the following comments as you walked to the refreshment table:

    1. "Budgets are the same regardless of the size of an organization or management's role in the budgeting process."
    2. "Budgets can include financial or non financial data. In our Organization, we plan the number of hours to be worked and the number of customer contacts we want our salespeople to make."
    3. "All Budgets are complicated. You have to be an expert to prepare one."
    4. "Budgets don't need to be highly accurate. No one in our company stays within a budget anyway."

    Do you agree or disagree with each of comment? Explain your answer (short)

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    Solution Preview

    1. Disagree. Budgets are a function of size and the management's role in the budgeting process. A large organization with many divisions would prepare budgets by the division and then consolidate while a small organization would straight away make the budget. In the same way the budget would differ based on management's role. If management delegates the authority to make the budget, the budget would be participative and would reflect what can be achieved since everybody has a stake in the budget. If the management prepares the ...

    Solution Summary

    The solution discusses the given characteristics of budgets