Acc 556 Assignment 2 Essay

4972 Words Jun 8th, 2015 20 Pages
Financial Accounting for Managers
Maurice Alexis
Strayer University
Prof. Dr Neil Weiss
March 17, 2015

1-Describe the company that you currently work for, have previously worked for, or would like to work for in the future. Determine at least two (2) compelling reasons that this company should prepare and manage a budget. Predict the two (2) most likely positive and negative financial outcomes for this company if it properly or improperly performs effective budgeting. Biomet 3I is the company I have been working for since 2007. Biomet, Inc. is a medical device headquartered in the Warsaw, Indiana business cluster. This company specializes in reconstructive products for orthopedic surgery, neurosurgery, craniomaxillofacial
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Such profits are necessary to provide additional compensation to shareholders/owners while constituting capital for future growth, repayment of debt, etc. By the way, it’s a good idea to create a personal budget, so the management team will know how much they need each month from the business in terms of salary and draws, distributions or dividends. Budgeting systems turn managers’ perspectives forward and by looking to the future and planning, managers are able to anticipate and correct potential problems before they arise (Horngren, Foster & Datar, 2000). Through budgeting, management can plan ahead and maintain enough cash to pay creditors, to have adequate raw materials to meet production requirements, and to have sufficient finished goods to meet expected sales (Kieso, 2002).
Careful planning is required to guide all parts of the organization towards its strategic long-term and short-term objectives. Anthony & Govindarajan (2000) saw strategic planning as being focused on several years, contrasted to budgeting that focuses on a single year and so a budget is a one-year slice of the organization’s strategic plan. The budget prepared for planning purposes, as part of the strategic planning process, is the quantitative plan of management’s belief of what the business’s costs and revenues will be over a specific future period (Davies & Boczko, 2005). According to Atrill & McLaney (2002), a budget’s role is