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You are asked to increase the budgeted manufacturing cost for ocerhead by 10%. Over the last...

You are asked to increase the budgeted manufacturing cost for ocerhead by 10%. Over the last years actual figures you noticed, accounting for inflation the increase is at most 2%. What would you do as an accountant "?
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To the 2% inflation rate, the consideration will be given by purchase and production department as it becomes their responsibility to procure and produce / manufacture at a lower rate by looking towards different alternative suppliers, method of production, measures to be adopted to avoid wastage, to reduce unproductive labour time and also make plans of processess to be performed which nullifies the 2% inflation for the organisation.

Inflation and change in budgeted amount can reduce the accuracy of financial accounts. As an accountant I would increase the Budeget Overhead cost by 10%.

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