COMM 305 Chapter Notes - Chapter 10: Direct Labor Cost, Budget, Sales Promotion
7 Apr 2017
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One of management"s major responsibilities is planning the process of establishing objectives for the company as a whole. To be successful, they should be both long-term and short-term plans. The plans state the company"s objectives and the proposed way of accomplishing them. A budget is a formal written statement in financial terms of management"s plan for a specified future time period. It"s usually the main way of communicating the agreed upon objectives throughout the company. Once adopted, the budget becomes an important basis for evaluating performance; it promotes efficiency and discourages waste. From accounting records, management can obtain historical data on revenues, cost and expenses. This is helpful information for setting future budget goals. Accountants are usually responsible for presenting management"s budgeting goals in financial terms. They translate management"s plans and communicate the budget to employees throughout the company. Accountants also prepare periodic budget reports that provide the basis for measuring performance and comparing actual results with planned objectives.
