ACC3200 Study Guide - Final Guide: Budget, Management Accounting, Controllability
8 Aug 2018
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Document Summary
Continually updated budgets where as one period is completed, another is added. There is always a budget for one year. Provides flexibility given that the environment and data are always changing: zero-based budgets. Budgets for all activities are initially set to zero rather than adding or deducting a percentage from the previous period"s figure. Forces managers to rethink and justify the resources they actually need. Not useful in identifying areas of waste, redundant activities or ways to improve performance (might repeat mistakes) Can be too introspective, managers can overlook their interactions with other dep"s and the relevance of their operations to overall bus strategies. Like profit-seeking organisations but there is often no sales budget. Other budgets may be estimated relating to their anticipated funding including government grants, donations, sponsorships, rates & taxes, Cost budgets are still required as resource allocation decisions are still made. Budgeting provides a means to identify issues and learn & adapt to changing conditions.
