Question

youre an accountant at a manufacturing facility and have been asked to increase budgeting manufacturin costs for manufacturing overhead by 10%. Based on last years actual figures you noticed, even after accounting for inflation the increase is at most 2%. what would you do in the situation if you werethe accountant?

Answer 1

I have been asked to increase budgeting manufacturing costs for manufacturing overhead by 10% but even after accounting for inflation an last years actual figure, increase can be at most 2%.

In this situation we can analyse the requirement of increasing the budget to 10% and feasibility of such demand.

This can be due to the many reasons such as installation of new machinery, unexpected increase in cost, unusual production in the factory.

If any such genuine reasons exist for such requirement then we can go for increase in budget along with posible scope of negotiations and if such increase is within the budget of the organisation.

But if no such reasons exist, then we can demand detailed explanation for such requirement and we can refuse this requisition in case of no satisfactory response.