MANAGERIAL ACCT.F/MANAGERS>CUSTOM<
4th Edition
ISBN: 9781307090147
Author: Noreen
Publisher: MCG/CREATE
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Chapter 1, Problem 1.1E
Planning and Control
Many companies use budgets for three purposes. First, they use them to plan how to deploy resources to best serve customers. Second, they use them to establish challenging goals, or stretch targets, to motivate employees to strive for exceptional results. Third, they use them to evaluate and reward employees.
Assume that you are a sales manager working with your boss to create a sales budget for next year. Once the sales budget is established, it will influence how other departments within the company plan to deploy their resources. For example, the manufacturing manager will plan to produce enough units to meet budgeted unit sales. The sales budget will also be instrumental in determining your pay raise, potential for promotion, and bonus. If actual sales exceed the sales budget, it bodes well for your career. If actual sales are less than budgeted sales, it will diminish your financial compensation and potential for promotion.
Required:
- Do you think it would be appropriate for your boss to establish the sales budget without any input from you? Why?
- Do you think the company would be comfortable with allowing you to establish the sales budget without any input from your boss? Why?
- Assume the company uses its sales budget for only one purpose—planning to deploy resources in a manner that best serves customers. What thoughts would influence your estimate of future sales as well as your boss’s estimate of future sales?
- Assume the company uses its sales budget for only one purpose—motivating employees to strive for exceptional results. What thoughts would influence your estimate of future sales as well as your boss’s estimate of future sales?
- Assume the company uses its sales budget for only one purpose—to determine your pay raise, potential for promotion, and bonus. What thoughts would influence your estimate of future sales as well as your boss’s estimate of future sales?
- Assume the sales budget is used for all three purposes described in questions 3—5. Describe any conflicts or complications that might arise when using the sales budget for these three purposes.
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Planning and Control
Many companies use budgets for three purposes. First, they use them to plan how to deploy resources to best serve customers. Second, they use them to establish challenging goals, or stretch targets, to motivate employees to strive for exceptional results. Third, they use them to evaluate and reward employees.
Assume that you are a sales manager working with your boss to create a sales budget for next year. Once the sales budget is established, it will influence how other departments within the company plan to deploy their resources. For example, the manufacturing manager will plan to produce enough units to meet budgeted unit sales. The sales budget will also be instrumental in determining your pay raise, potential for promotion, and bonus. If actual sales exceed the sales budget, it bodes well for your career. If actual sales are less than budgeted sales, it will diminish your financial compensation and potential for promotion.
Required:
1. Do you think it would…
A company can expect to receive which of the following benefits when it starts its budgeting process?
The budget provides managers with a benchmark against which to compare actual results for performance evaluation.
The planning required to develop the budget helps managers foresee and avoid potential problems before they occur.
The budget helps motivate employees to achieve sales growth and cost-reduction goals.
All of the above
A company can expect to receive which of the following benefits when it starts its budgeting process?
a. The budget provides managers with a benchmark against which to compare actual results for performance evaluation.
b. The planning required to develop the budget helps managers foresee and avoid potential problems before they occur.
c. The budget helps motivate employees to achieve sales growth and cost-reduction goals.
d. All of the above
Chapter 1 Solutions
MANAGERIAL ACCT.F/MANAGERS>CUSTOM<
Ch. 1 - Prob. 1.1QCh. 1 - Pick any major television network and describe...Ch. 1 - If you had to decide whether to continue making a...Ch. 1 - Why do companies prepare budgets?Ch. 1 - Prob. 1.5QCh. 1 - Why is managerial accounting relevant to...Ch. 1 - Prob. 1.7QCh. 1 - Why do management accountants need to understand...Ch. 1 - Prob. 1.9QCh. 1 - Pick three industries and describe how the risks...
Ch. 1 - Pick any large company and explain three ways that...Ch. 1 - Why do companies that implement Lean Production...Ch. 1 - Why are leadership skills important to managers?Ch. 1 - Why are leadership skills important to managers?Ch. 1 - Planning and Control Many companies use budgets...Ch. 1 - Controlling Assume that you work for an airline...Ch. 1 - Prob. 1.3ECh. 1 - Ethics and the Manager Richmond, Inc., operates a...Ch. 1 - Prob. 1.6ECh. 1 - Ethics In Business Consumers and attorney generals...Ch. 1 - Prob. 1.9ECh. 1 - Corporate Social Responsibility In his book...Ch. 1 - Prob. 1.11ECh. 1 - Cognitive Bias and Decision Making During World...Ch. 1 - Ethics and Decision Making Assume that you just...
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