Week 8 acc531

Budgeting Process Name Institution Course Code and Title Instructor Date Budgeting Process Budgeting is critical to the success of manufacturing companies because it ensures efficient allocation and use of resources. Budgeting considers different scenarios due to the changes in the business environment, resulting in overestimation of budgets. Budgeting in large organizations involves all departments and managers, with management having the power to amend and approve proposed budgets. However, in some instances, the management assesses the budget and proposes reductions to align it with revenues. ABC Manufacturing’s proposed budget has increased from the previous year, implying that the management should avail more resources. However, an increase in budget should have a direct impact on the organization’s impact (Riyadh et al., 2023). The company’s management strategy of reducing the proposed budget by 20% is to maximize productivity under scarce resources and minimize wastage. Therefore, the budgeting team should have realistic changes in budget from previous budgets. The budget proposal to increase the training budget by 100% should reflects the company’s performance gaps. The increase in budget should follow a gradual process to prevent rapid increases in expenditures. The budget on recurrent expenditures, such as cleaning, insurance, phone, rent, and utilities, should be fixed or have slight increase. Therefore, increasing the company’s recurrent expenditures by at least 20% implies that the income will reduce if sales do not increase at the same rate. Overall, ABC’s budget process is not effective in planning expenses f...