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Chapter 21 - 21 Budgeting Student Version 11-1 21 1...

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11-1 21-1 21 Budgeting Student Version
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11-2 21-2 1 Describe budgeting, its objectives, and its impact on human behavior. 21-2
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11-3 21-3 1. Planning involves setting goals as a guide for making decisions. Objectives of Budgeting 1 1. Directing involves decisions and actions to achieve budgeted goals. 1. Controlling involves comparing actual performance against the budgeted goals.
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11-4 21-4 A budgetary unit of a company is called responsibility center . Each responsibility center is led by a manager who has the authority and responsibility for achieving the center’s budgeted goals. Responsibility Centers 1
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11-5 21-5 Controlling Through Feedback As time passes, the actual performance of an operation can be compared against the planned goals. This provides prompt feedback to employees about their performance. If necessary, employees can use such feedback to adjust their activities in the future. 1
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11-6 21-6 Although it is desirable to establish attainable goals, it is undesirable to plan lower goals than may be possible. Such budget “padding” is termed budgetary slack . Budgetary Slack 1
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11-7 21-7 Goal conflict occurs when individual self-interest differs from business objectives or when different departments are given conflicting objectives. Goal Conflict 1
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11-8 21-8 2 Describe the basic elements of the budget process, the two major types of budgeting, and the use of computers in budgeting.
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11-9 21-9 Continuous Budgeting A variation of fiscal-year budgeting, called continuous budgeting , maintains a twelve-month projection into the future.
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