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Research the budget approach taken by the company you work for. 1. How predictable are its...

Research the budget approach taken by the company you work for. 1. How predictable are its operations? 2. What is the extent of change that occurs in the company? 3. What time and resources is allocated to budgeting? 4. What approach does your organisation take to budgeting (i.e. top-down, bottom-up or hybrid) and why? 5. What methods are used in preparing the budget (i.e. incremental, zero-based, activity-based, performance-based or outputs-based)? Explain how it is used.

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Answer #1

In the company I work in, they work on Flexible Budgeting. Flexible budget refers to preparing Budget A, B & C considering the level of changes which may impact the financials. In case, Budget A doesn’t appear to be practical, Budget B is immediately chosen to maintain the level of Guidance.

.1. Predictable: We prepare budgets based on past experiences. However, we keep 2-3 budgets handy in case of initial budget not suiting the requirements

2. Extent : 15% to 20 % could be the variation in budget.

3. Time & Resources : Usually it takes 15-20 days & 4-5 senior management employees to arrive at the final budget.

4. Top-Down budgeting is used in my organization.

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