Cost Accounting DB 5

Module 5: Discussion Forum

No unread replies. No replies.

Opponents of the traditional budgeting process argue that the process has to serve too many purposes to be useful in any one particular discipline: allocating resources, financial planning, performance management, and setting operational targets. They also argue that because meeting budgets are often tied to compensation packages, there are often negotiations and biases during the budgeting process, and ethical dilemmas arise.

• Counter these points with at least two of the value-added aspects of traditional budgeting for your response.

Your initial posting should be 250-500 words and must be submitted by Thursday, midnight, of this week.

Solution Preview

Cost Accounting

In cost accounting, traditional budgeting processes were developed to create a plan on how various funds would be used so as to achieve the set goals of the institution. Some of the purposes of traditional budgeting include financial planning, allocating resources, forecasting cash flows, and performance management. Performance management is measured or assessed through analyzing whether operational targets are met from time to time. Individuals who support the application of traditional budgeting processes also suggest that the budgets are often tied to the compensation for employees.

(305 words)