Math for Managers

Chapter 9 Budgeting Calculations: Assumptions and Pro-rations

Budgets have been described as a list of priorities and “political” documents.25 This is true because, during setting priorities within an organization, the individual who has authority to prepare and approve budgets determines where money is going to be spent, which segments, or departments will be expanded or allowed to hire more employees, and which projects will rise to the top of the list.

As an aspect of management accounting concerned with producing financial information for decisions, budgeting:

… is usually an annual, cyclical process (although budgets can be prepared for longer or shorter periods). However, with a sound system of budgeting in place, the other management accounting ...