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Developing a Budget Request

Please provide in depth answers to these questions after following the instructions in the word doc and the corresponding excel spreadsheet. Please provide completed spread sheet and answers to questions once complete.

Discussion questions
1. Did the department meet its goal of generating revenues sufficient to cover direct expenditures for each of the years for which data are available?
2. Which of the two approaches yielded more preferable forecast for FY 2013-14 - The 1% incremental estimate or the TMA and why?
3. Based on your knowledge of public budgeting to date, did the department adopt a "balanced budget" for the current year? What issues might arise when defining a balanced budget? Are the department's services public or private goods? Discuss the reasons for your choice.
4. Given your preliminary projections, will the department be able to adopt a balanced budget next year? If not, what options does the department have to ensure that revenues meet expenditures?
5. Based on your knowledge of budgeting and the information available, what system of budgeting will you recommend for this department and why?
6. Discuss the key budget linkages for this department based on your knowledge regarding budget inputs and outcomes.

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Solution Preview

Thanks for your question! See the attached Excel spreadsheet and Word Doc for explanations of your questions.

Thanks for your question!

To understand the TMA approach of budgeting, I used information found here:

http://www.scribd.com/doc/55951374/7/Transformation-Moving-Average-TMA

"In TMA, we take the trend into consideration by computing Incremental changes over time. Let us use the data in Table 1.2 to illustrate this technique. The incremental changes are shown in Table 1.3.We then need to average the increments to get an average increment. In this case, it is (3.00 + 1.00 + 3.00 + 2.00)/4 = 2.25. The forecast revenue in Year 6 is the most recent actual, 19.00 in Year 5, plus this increment, which is 19.00 + 2.25 = 21.25. TMA is a very simple technique. In general, it is more accurate than SMA and EXS for trend data."

Discussion questions

1. Did the department meet its goal of generating revenues sufficient to cover direct expenditures for each of the years for which data are ...

Solution Summary

The expert develops a budget request. Two approaches which yielded more preferable forecasts are determined.

$2.19