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How does a company budget efficiently?

Aims

To understand budgeting
Explore the concept of `zero based' budgeting
Recognise the importance of `historical' data

Why bother?

So no department runs out of money
Provides a `yardstick' from which management can judge the success of specific
departments

Budget and hierarchy

Directors-agree a…

Page 2

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Greed- People will take more than they need given an opportunity
All managers are going to want the highest budget as it means they can work more
efficiently
Bosses want to keep budgets as low as possible
Nobody knows what the `right' figure is
Main problems are managers being inexperienced…

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