Management Accounting Case Book

Sometimes Accountants Fail to Budget

Gail Hoover King, Purdue University Calumet; Jane Saly, University of St. Thomas

THE CASE IS BASED ON THE ACTUAL EVENTS within a nonprofit organization. Students are required to analyze the information given in the case to determine what information is relevant for analyzing variances, determine the reason for variances, and provide suggestions to avoid further losses. In addition, the case simulates a real-world situation where all relevant information is not available or not in a format that allows for detailed analysis.

The case can be used in both an undergraduate intermediate managerial accounting/cost courses and graduate-level cost accounting courses. It is helpful if students have studied profit planning, budgeting, and basic variance analysis.

Keywords: budgeting, variance analysis, not-for-profit, and volunteer board’s responsibility.

Sometimes Accountants Fail to Budget

Gail Hoover KingPurdue University Calumet

Jane SalyUniversity of St. Thomas

Budgeting is important in all organizations, but it is especially in nonprofit organizations where revenue sources are often inconsistent from year to year. Nonprofit leadership has a fiscal responsibility to monitor the variances between actual revenues and cost and make operating decisions to ensure the organization’s viability and success.

INTRODUCTION

In August 2003, the Steering Committee of the American Accounting Association Midwest Region (AAA-MW) discovered that its 2003 ...