250_Notes_8B

250_Notes_8B - ACCT 250 ACCOUNTING FOR DECISION MAKING...

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ACCT 250 – ACCOUNTING FOR DECISION MAKING NOTES – CHAPTER 8B SPRING 2008 SUMMARY Here we introduce the role budgets play and the process of budgeting. NOTES 1) The role of budgets a) What is a budget? A plan for action in a coming period including financial and non-financial info Master budget includes: o Operational budgets – o Financial budgets – b) Why do it? Provides a plan – the exercise of planning is highly correlated to success Provides a yard-stick – something to measure actual results against o People know what is expected of them – provides motivation Provides an opportunity for mid-level managers to be involved in planning Provides coordination among different operating units of the firm Identifies issues which need to be resolved Budgets often serve as targets for bonus compensation – can create problems! 2) Connection to strategy As we discussed in chapters 1 and 2, strategy drives many key decisions An annual review of the firm’s strategy and long-range plan sets the table
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This note was uploaded on 04/18/2008 for the course ACCTG 250 taught by Professor Rabe during the Spring '08 term at Luther.

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250_Notes_8B - ACCT 250 ACCOUNTING FOR DECISION MAKING...

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