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Budget Making Essay

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Below is an essay on "Budget Making" from Anti Essays, your source for research papers, essays, and term paper examples.

Budget making is a technical task. The behavioral aspects of budgeting refer to the human behavior that is brought out in the process of preparing the budget and the human behavior that is induced when people try to live with the budget. Budgets have a direct impact to human behavior. Budgets tell people what is expected of them and when it is due. They place limits on the way be purchased and how much may be spent. They are reason that managers’ performance is continually monitored and the standard against which the performance results are compared. Budgets are often viewed as bureaucratic impediments or threats to career advancement. The dislike of the whole budget process may even induce people to sabotage the budget.

There are three major stages in the budget-making process:

1. Goal setting,
2. Implementation
3. Control and performance evaluation.

To develop a budget or profit plan, certain sequential steps have to be taken:1.

Top management has to decide what the firm’s short range objectives are and what
strategies will be used to attain them.2.

Goals have to be set and resources allocated. Goals are the short-range quantification of the objectives.3.

A comprehensive budget or profit plan has to be prepared then approved by topmanagement.4.

Finally, it is used to control cost and to pinpoint problem areas in the organization by periodically comparing actual performance results to the budgets goals.

Goal-Setting Stage
The planning activity begins with the translation of board organizational objectives into specific activity goals. To develop realistic plans and create a work-able budget, extensive interaction is required between the organization’s line and staff managers. The controller and director planning play key roles in this human process of budget making. Realistic goals established through meaningful participation will favorably affect the aspiration levels of managers and employees. Lack of participation, or mere lip...

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"Budget Making". Anti Essays. 23 Jun. 2018


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Budget Making. Anti Essays. Retrieved June 23, 2018, from the World Wide Web: https://www.antiessays.com/free-essays/Budget-Making-555791.html