Chapter_9_Handout__1 - CHAPTER 9 BUDGETARY PLANNING I Roles...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 9 BUDGETARY PLANNING I. Roles of Budget in the Planning and Control Cycle LO 1 - Describe the phases of planning and control process. A. In the first chapter, we introduced the four functions of management: planning, organizing, directing/leading, and control. This process is sometimes referred to as the planning and control cycle . 1. Planning is the forward-looking phase of the planning and control process that involves setting long-term objectives and defining short-term tactics that will help to achieve them. 2. Once the plan is in place, managers must begin organizing or arranging for the necessary resources needed to achieve the plan. 3. An important of the organizing process is the creation of a budget . 4. The next step, directing/leading , involves all actions managers must take to implement the plan including motivating employees to achieve results. 5. As the plan is implemented, the managerial accounting system keeps track of the actual results, which are used later in the control process. 6. The control function is the backward-looking part of the planning and control cycle. In this phase, managers compare actual to budgeted results to determine whether employees have met the objectives set during the planning stage. B. Planning Process 1. The starting point of the planning process is manager’s strategic plan or vision of what they want the organization to achieve over the long term. 2. The strategic plan is then translated into long-term and short-term objectives and the tactics necessary to achieve those objectives. 3. A long-term objective is a specific goal that managers want to achieve over the long run, typically 5-10 years. 4. A short-term objective is a specific goal that managers want to achieve in no more than a year to reach their long-term goals. 5. Tactics are the specific actions or mechanism managers use to achieve the objectives. C. Benefits of Budgeting LO 2 - List the key benefits of budgeting. 1. One of the major advantages of budgeting is that it forces managers to look to the future. 2. Budgets also play an important communication role within organizations. They provide mechanism for managers to share expectations and priorities for the future. 3. Budgets serve an important role in motivating and rewarding employees.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4. Budgets also provide useful benchmark for evaluating and rewarding employee performance. D. Behavioral Effects of Budgets LO 3 - Explain the behavioral effects of budgets and provide guidelines for implementing a budget. 1. The way in which managers and employees behave in response to budget depends, in large part, on how goals and budget are set. Two considerations are especially critical: a. The relative difficulty of meeting goals, and b. The degree of employee participation in establishing goals. 2.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 6

Chapter_9_Handout__1 - CHAPTER 9 BUDGETARY PLANNING I Roles...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online