FIN 4274 Management

Accounting
Lecturer: Ms Salwa
Group members: (BAF Y2S1)
1. Chin Xin Tong (SUKD 1700823)
2. Yee Sin Mei (SUKD 1701293)
3. Tee Wan Nee (SUKD 1700521)
4. Tan Guan Xiong (SUKD 1701237)
a. Evaluate how a typical budgetary process is undertaken in a business
organization.

Definition of budgeting
• It is actually a financial implementation.
• Budgeting will take advantage for the
organization.
Example: Financial growth,
Unnecessary cost

Marketing Packaging Administratio

Departme Departmen n
nt t Department
 Budgeting Process

Step 1 Step 4
Step 2 Step 3
Planning Establish
Analysis Negotiating expenses
tracker

Step 8 Step 6
Step 7 Step 5
Stick to Review
the Balancing and Classified
budget share
b. “Budgets are important in profit planning for private-sector
firms, but budgets are costly and time consuming frills in not-for-
profit organizations.” Discuss
1. Importance of profit planning in private sector firms

To specify the sales target

and the various costs
reduction
• output produced quantified
in terms of sales revenue 
connection between cost
spending & anticipated
output
Guarantees that sufficient
fund are allocated to the
firm’s activities
• assists private sector
manager to manage their
cash flow
Provides a better
communication between the
manager and employees
• top management should
comprehend the budget

To highlight the variations found
between actual results and planned
budget
• indicate the weaknesses and bottleneck
Enable the private firm to obtain credits and
capital fund
• To show and prove to the partners regarding on how
their contribution will affect the sales revenue and
profit earned by the firm
2. Budgets are costly and time consuming frills in not-for-profit organization

1. Lack of Financial
2. Lack of 3. Instability of
Education of the
Manpower Cash Flow
Board of Executives

4. End year budget

4. Modification
reconciliation must
accordingly to the
always end with a
latest cash flow
balanced budget
c. Evaluate what participative budget is and compare and contrast the pros
and cons of participative budget.

Participative Budget
Budget
- Process of decision made
- Common by 2/ 2 parties
management tool
- Will influence in the
- Ability to future
support
economics - Once subordinates
entities participate, the “budget”
will only created
Advantages
Great influence for job
Good communications Maintain effective satisfaction
- important when transferal exchange of information - when employees participating in
information - discuss issues & solve the doing the job, are recognized as
- especially high difficult task problems members
- Feel that they are important

Obtain more realistic &

accurate budgets Help to clarify work tasks
- Have their own opinions to - Reduce the situation of role
create “double win” ambiguity

A challenge if too many person
Time Consuming
- Biggest drawback of
participating in budget
- Delay & indecision
Disadvantages
participate
- will drag on the negotiation
- if doesn’t reach agreement, superior
have authority to make final decision
- will lower down the confidence of
subordinates

The attitude of
negotiators will affect the
outcome
- once the decision made, the
responsibility will be more
stressful
The cost of Subordinates manipulate
implementation is high their own benefits
- need a lot time/ money before - business are conducted
decision made according “bottom up- top down”