Question

Have you ever been involved in the budget process at your organization? If so, describe your role and responsibilities. Do you think people at your level in the organization should provide budget inputs, and why or why not? What aspects of the budget process might you change where you work, or at home, if you had the opportunity?

Tow resources needed for the answer

Class: Managerial Accounting

Answer 1

I work as an accounting and finance manager in a manufacturing company and in my role as a manager I have been involved in the budget process within my organization. My roles and responsibilities primarily include support services. My primary role is to support the budget by providing key inputs with regards to different types of costs. I am actively involved in forecasting activities based on the business model and operations of the company and also based on the macro and micro economic factors that have an impact on the company’s financials. I am required to use my accounting knowledge of the company to develop a cost forecast for different types of costs. I focus on developing forecasts primarily for variable costs like direct material, direct labor, variable overheads, variable selling expenses etc. The figures pertaining to capital expenditures and fixed expenses are developed by the senior management and is derived from the strategic actions of the company being undertaken.

Yes, people at my level in the organization should provide budget inputs as people at my level have a deep understanding of the day to day working and activities of the organization. As such they are in a position to provide meaningful insights and inputs to the senior managers which will eventually help them to develop a realistic budget.

The aspect of budget process that I would like to change is the process with regards to projection of target profit margins. In my organization development of target profits is a subjective process and I would like to make the process more objective. Profits should be projected on the basis of a proper framework and should rely on realistic assumptions. I would like to develop a model for profit projections so that the level of variance is minimized and the profit projections is largely accurate.

References:

1. Budgeting and business planning. Retrieved from https://www.infoentrepreneurs.org/en/guides/budgeting-and-business-planning/

2. Retrieved from https://www.incorp.asia/blog/13-steps-to-follow-when-creating-a-business-budget/