Budget Process Paper

Decent Essays
There are thousands of people who budgets on a daily basis. A budget is a financial plan of revenues, expenses, and future costs for a given period. It allow individuals to set goals for themselves, so they can achieve them. The budget process is important in public and private sectors because it coordinates the organization’s activities. Budgeting involves positive effects which influence our decisions on a range of activities. In Public Budgeting Systems, Johnson and Joyce introduce the budget as “a set of preferences.” The distribution of resources among different agencies for various activities reflect on consumer preferences. Most industries create a budget to project their spending for short term and long term goals. Budgeting help target the specific sales and production an organization want to achieve for a variety of time periods. When we budget, it have a strong effect on our decisions because it regulate the…show more content…
The three main elements of decision making consists of pure rationality, incrementalism, and limited rationality. There are key differences between the three theories, but they are essential to many corporations. Pure rationality is an orderly budget process that chooses the best alternative to increase sales from its resources. When problems arise, information about all alternatives are available for the actor(s) to pick the best solution unanimously. The rational model explains that pure rationality’s main objective is to maximize benefits and minimize cost with its resources. For example, if you are selling a MacBook laptop for $1,500.00 and you receive five offers, it will always result in optimal choice. This is a managerial aspect of decision making because actors want what is best for the organization. For each decision they make, the organization must take responsibility when there are
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