The budgeting process employed by Peters Corporation is discussed in terms of its contribution to the failure to achieve the president’s sales and profit targets. The first issue lies with the president setting targets for total dollar sales and net income before taxes for the next year. Subsequently, the president conveyed the sales target solely to the marketing department. Such a top-down approach in decision-making causes problems as it excludes certain departments and their input from the process. This flawed method is evident in the difficulties faced in achieving the budget, underperforming sales, and various departments disputing the accuracy of the budget and seeking additional funds. Establishing unattainable goals without considering input from all departments hinders progress. In order to create a more effective budget, it is imperative to involve all departments and allow them to provide their input.
Suggest how Peters Cor
...poration's budgeting process could be improved by implementing participative budgeting. This approach involves inviting each level of management to contribute to the budget development process. By including lower-level managers, who have more detailed knowledge of their specific areas, more accurate budget estimates can be obtained. Additionally, involving these managers in the process increases their satisfaction with the budget. Developing the budget from top management down increases the risk of unrealistic budgets.
Should the functional areas be required to reduce their expenses in the event that sales volume falls below the budget? Please provide an explanation for your answer. The budget should be centered around particular objectives. If certain departments exceed their budget while sales volume remains low, then they will have to decrease their budget. Effective budget planning requires communication among the departments throughout the
budgeting process.
- Accounts Receivable essays
- Auditor's Report essays
- Balance Sheet essays
- Costs essays
- Financial Audit essays
- International Financial Reporting Standards essays
- Tax essays
- Accountability essays
- Cash essays
- Principal essays
- Management Accounting essays
- Internal Control essays
- Accounting Software essays
- Cash Flow essays
- Money essays
- Financial Accounting essays
- Market Segmentation essays
- Supply And Demand essays
- Purchasing essays
- Forecasting essays
- Legacy essays
- Bank essays
- Corporate Finance essays
- Financial News essays
- Financial Ratios essays
- Financial Services essays
- Free Market essays
- Shareholder essays
- Personal finance essays
- Equity essays
- Financial Crisis essays
- Banking essays
- Credit Card essays
- Currency essays
- Debt essays
- Gold essays
- Loan essays
- Enron Scandal essays
- Foreign Exchange Market essays
- Investment essays
- Venture Capital essays
- Stock Market essays
- Retirement essays
- Donation essays
- Net Present Value essays
- Income Statement essays
- Commercial Bank essays
- Debit Card essays
- Deposit Account essays
- Subprime Lending essays
