Budgeting

[object Object],Co-ordinataion Responsibility Evaluation Utilization Motivation Planning Telling

T Y P E S O F B U D G E T The budget for the period is prepared by adjusting the previous period‟s budget (or actual results if available). ZBB aims to eliminate non-value adding activities by evaluating the costs and benefits of each decision package. ABB is a technique used to budget that focuses on the cost of activities rather than assuming that costs increase in direct proportion to output.

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Questions (September 2010) ,[object Object],[object Object],Required: Discuss the potential advantages and disadvantages to the college of involving the senior staff in the budget preparation process. (Total for Question Three = 10 marks)

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],• It may cause CW to borrow funds in order to fund the new capital investment or the additional working capital in the business. This funding would not really be required but if taken would cause CW to incur additional financing costs.

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Question ( May 2010) ,[object Object],[object Object],[object Object],[object Object],Required: (a) Discuss the present budgeting system and its likely effect on divisional partner motivation. (b) Explain two non-financial performance indicators (other than client satisfaction and service quality) that could be used by the firm.

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Answer to (b) A number of non-financial performance indicators could be used by the firm. These include: • Number of training days for staff and partners – which is used to measure the investment by the firm in its people and the firm’s commitment to providing up to date and current information to its clients. • Response time between the enquiry and the first meeting with a client – which is used to measure the efficiency and flexibility of the firm to meet client demand.

Budgeting

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