Q

In buns Bakery’s case study, Andy straightway assigned duty of budgeting to Nicole Quarter man,employed as Buns’employee

Home, - Budget and Budgeting: Bun’s Bakery Case Study

Budget and Budgeting: Bun’s Bakery Case Study

Introduction of Topic and Facts as presented in the case

In the business World today, budgeting has been widely used as a tool for budgetary control by many companies mainly to achieve their financial performance. Budgeting systems are applied all over in the whole world and have been considered absolutely necessary tool for financial planning and performance. According to Burger (2012), the budgeting ensures regular checks over aggregate expenditure and generate full particulars of financial performance statements on resource utilization but not concerned with long term development plans over the medium term activity. Budgeting entails setting of goals, giving an account of actual financial performance and performance evaluation in terms of set financial goals. Venkatasami (2015), stated that budgetary control helps to achieve effective co-ordination of activities of the varied government ministries and departments by setting financial goals as a way of attaining predetermined financial performance.

                             A summary of the area(s) of accounting

In buns Bakery’s case study, Andy straightway assigned the duty of budgeting to Nicole Quarter man, who had just been employed as Buns’ employee. And because the task was the first assignment for her, she began with making engagementswith every departmental head to collect data for budgeting and also to understand furtherregarding the company. Budgeting, just like other organizational activities, has merits and demerits. In regard to some factors comprisingorganizational beliefs or resources, some Buns bakery offers them a primordial spot in managing its operations.The allocation of resource theory was developed by Peteraf and Barney (2003) and is concerned with the discovery of how distribution economic resources is done through budgeting process. It’s on the basis of the allocation of resource theory that, Buns Bakery is able to allocate the financial resources at their disposal using the budgetary control system in its effort to attain financial goals. Therefore under this theory, the firm allocates funds to its budgets and projects guided by competition a certain project has in comparison with other firm’s project demand and the availability of funds. Expenditure theory suggests that, descriptive theory is based on close observations or participations in public entities budget operations in order to achieve financial objective(Day & Klein, 1991). Day & Klein (1991,) described sequences of events on budgets and inferred causes of variations as well as uniformities across budgeting process. Rubin further stated that normative theory, gives solutions mainly on financial values rather than observations of events on budgets.

Detailed Case Discussion

An overview of the budget process including the role of budgets and budgeting

Budgeting process is a vital aspect in both control and planning at Buns Bakery. Key (1940) established that most budgeting islinkedto negative, penny-pinching management processes while the complete process is much wider and more constructive. Budgeting is concerned with planning for the future, monitoring undertakings to comprehend whether they adapt to the plan and executing those plans (Thomas, 2000). In order to perform the process effectively, there is need for Buns bakery’s top management to cooperate with,motivate, and support middle-levelleadersand employees, and properly designed reporting systems (Lucey, 2002). 

The budgeting process consists of activities that encompass the formation, evaluation, and implementationof a program to offer capital assets and services (Drury, 2000). A decent budgeting practiceintegrates a lastingstandpoint, creates links to Bun bakery’s objectives, places the budget decision to the outcomes and results and upholds proper communication with the stakeholders. The budgeting process is tactical in nature and not just an issue of harmonizing expenditure and incomes after a certain period of time. A yearly budget is normally segmented by quarters or months. The accountedaggregates for a year are normallyreviewed as the year ends. Budgeting includesdirect materials, direct labor, and manufacturing overhead to get the cost of producing each unit. Direct materials are calculated from the recipe and direct labor cost from the employee information. But there is need to multiply the number of hours it takes to make each product by the predetermined overhead rate so as to figure a per-unit applied overhead amount.

Influencing the budget process, how the budget process is influenced by individuals

Buns bakery members dominate the participation in the budgeting process by identifying the top priority projects and flagship projects, documenting them in a blank flip charts, outlining major challenges faced and proposed solutions at the departmental levels. According to Whittington (2012) during participation, individuals identify the projects they would like to be installed, repaired or rehabilitated within their settings. By so doing, they actively participate in decision making on issues affecting the company, give priority of projects to be undertaken and provide information on challenges they face.Buns bakery recognizes the rights of Individuals hence the management encouragesindividuals to participate in giving priorities to important components of the budget, projects identified by more than one individual and high impact projects with potential to benefit the whole firm are given a priority. 

The persuasiveness of budgets across organizations

Budgeting Planning costs is the key element to budgeting and budgetary control (independent costs) which determine the magnitude of other budgeting costs related to budget implementation costs, budget control costs, budget monitoring &variance costs. If budget planning is carried out well, its costs and those of other budgeting elements will be minimal, thus county government financial performance is depicted through developments in terms of projects. The moderating (control) variables refer to those elements which determine the financial performance of organizations either directly or indirectly. Budgeting systems are the commonly used process by organizations to help realize their performance. Therefore, organizations such Buns Bakery also consider managerial expertise in implementation of activities and development budgets in order to achieve the set financial goals. Budgeting is a unique process whose formulation, implementation, and control involve observation of laws, rules and procedures aimed at achieving the financial performance through delivery of services and goods. According to Drunk (2011) the extent to which budgeting influences the f organizations is determined by the way in which budgets are used by those firms.

The most challenging parts of the budgeting process

Generally budgeting control is used as a financial performance measure in organizations but particularly it is not the only determinant of performance as other factors also account to the overall achievement of its goals. With the support and acceptance of top management team, budgetary control systems always derive the purpose of financial performance though if lower level personnel sense that the top management does not fully embrace budgetary controls, their own attitude reveal similar lack of interest (Perrin et al., 2012). Perrin further stated that budgeting is a complicated process in which, if the key management team does not commit itself into it then it’s likely that the other personnel will not adopt the budgeting system.

 Personal conclusion to the case

The allocation of resource theory was developed by Peteraf and Barney (2003) and is concerned with the discovery of how the firm distributes economic resources through budgeting process. It is on the basis of the allocation of resource theory that, Buns Bakery is able to allocate the financial resources at its disposal using the budgeting process in its effort to attain financial goals. Therefore under this theory, the firm distributes its funds to the budget guided by competition operations have in comparison with its other demands and the availability of funds.

Conclusion

Bun’s Bakery’s case study offers valuable information on budgeting as a tool used by firms to manage and control their finances. Since many organizations employ budgeting as a formality, Buns Bakery case helps in knowing the importance of using the budget as costs control mechanism which in turn leads to revenue and projects growth. Therefore, firms may be able to address any issues which might arise in future.

Leave a comment


Captcha

Related :-