\"Budgetary stock\" occurs when Employees refuse to adhere to budgeted plans and
ID: 2461240 • Letter: #
Question
"Budgetary stock" occurs when Employees refuse to adhere to budgeted plans and operations The budget to so difficult to meet that employees slack-off from work An authoritative, or imposed, budgeting process is used. To "meet" budget objectives, employees ask for resources in excess of what they need Employees ask for fewer resources than they need, in order to continuously improve. Which of the following statements about budgeting a not true? Budgeting is designed to be an aid to planning and control Budgets create standards for performance evaluation Budgets help coordinate the activities of the entire organization. Budgeting forces managers to think ahead and to formalize long-rango objectives Budgeting eliminates the need for day-to-day monitoring of operations. Zero-base budgebng (ZBB) differs from traditional budgeting in terms of its requirement to. Justify all budgeted operations and associated spending. Consider the time-value of money in the budgeting process. Start the budgeting process from the lowest level of the organization. Incorporate continuous-improvement standards in the set of financial and operating budgets. E. Minimize the existence of "budgetary slack."Explanation / Answer
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Answer: D: When to meet the budget objective employees ask for resources in excess of what they need.
Budgetary slack is the deliberate under-estimation of budgeted revenue or over-estimation of budgeted expenses. This allows managers a much better chance of "making their numbers," which is particularly important for them if performance appraisals and bonuses are tied to the achievement of budgeted numbers.
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Answer: E: Budgeting eliminates the need for day to day monitoring of operations
The day to day monitoring of operations are one of the most essential control activity that must be performed to achieve the budgeted result for the company. Budget is nothing but a financial projection of the company operations based on the predetermined standard which should be achieved at every aspect under normal operating conditions. Budget itself cannot achieve the standard of performance set by it, but the employees must be monitored and guided continuously to stick to the budgeted performance.
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Answer: A: to justify all budgeted operations and associated spending
Zero-based budgeting (ZBB)With zero-based budgeting, the budgeting process starts from a base of zero, with no reference being made to the prior period's budget or actual performance. All of the budget headings, therefore, literally start with a balance of zero, rather than under incremental budgeting, when they all start with a balance at least equal to last year's budget or spend. Every department function is then reviewed comprehensively, with all expenditure requiring approval, rather than just the incremental expenditure requiring approval.
Zero-based budgeting tries to achieve an optimal allocation of resources to the parts of the business where they are most needed. It does this by forcing managers to justify every activity in their department as they know that, until they do this, the budget for their department is zero. If they are unable to do this, they aren't allocated any resources and their work therefore stops (as does their employment within the organisation, at this point, presumably). In this way, all unjustifiable expenditure theoretically ceases
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