Need hel with question on budgeting and departmental management

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Question description

There are two common methods for approaching budgeting at the department level. Using the more sensible approach departmental management carefully determines the funds needed for each of the group’s controllable budget categories and submits as accurate a budget as possible.

The second method, unfortunately utilized a great deal of the time, perhaps even most of the time, requires involvement in “the budgeting game.” In this approach, departmental management calculates an honest budget, and then tacks on an additional percentage to each budget category on the assumption that higher management or at least the finance department will assume a certain amount of padding and arbitrarily reduce each category by some unknown percentage. The essence of the “game” lies in being more accurate that the other party in guessing the percentage of padding and thus the percentage of reduction. This sometimes goes back and forth for three or four iterations until the department’s total lands where higher management or finance wants it to be.

Instructions:

Comment on the validity of “the budgeting game,” and describe how you as a supervisor or manager would approach or strategize on how to break out of the “game” and submit an honest, accurate, and acceptable budget.


Tutor Answer

(Top Tutor) Daniel C.
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School: UT Austin
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