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Budgets is a kind of prediction which can estimate the future situation of income and expenditure. There kinds of reasons to makeing budgets: provide the pricing of the products, to control the costs, manage the financial status, and the most important is budgets' executor can based on the prediction of problems about to occur, the trend of environmental change to take measures to prepare the next projects, control the deviation and finally to realize the ultimate goal. Therefore, budgeting play an significant role in the whole process of the accounting management. A successful budgeting is need flexibility as well as inflexibility. That means it must have a rapidly reflex speed according to constantly changing of account and current issues , meanwhile, based on the fixed certain expenses, the budgets of those bills should be an inflexible element. However, budgets not only have the benefits but also have the problems. Budgeting is drew up and got through before the preparation time of the plan, and environmental changes may affect the effect of it, though, budgets in accounting management occupied a very important position, it still can not replace all the functions in business management.
2. Part one
2.1 production budget in units
2.2 Raw materials purchases budget in kilos and value
2.3 Raw material purchase budget in value
3. Part two
3.1 Benefits of budgets
3.1.1 Draw up plans and reach the final goal.
On the one side, no matter in big organizations or in small firms, they must have financial goals as well as the expected results. In order to achieve the goal, company draw up a plan and make profitable decisions according to the established budgeting to better manage its operations and to make the finances function well. Meanwhile, it has strong influences to strategies that changes with objectives and current situations change.
On the other side, budgets not only reflect expected results, but also can forecast the possible problems and solve it ahead.
3.1.2 Give the standards of performance
The budget makes staffs to understand what is the company's requirements. On the basis of the new budgeting, comparing with past acture performance, staffs can gain lots of meaningful informations. Another significant point is let employees participate in the budget process encourage staff's working passions. It can be shown by following views: Bugeting supporting staffs to set an objective match the enterprise consistent goal, combining the two goals can make the company runs more harmonious. A reasonable and achievable budget target can stimulate the potential of employees, at the same time budget implement with the reward and punishment system promote staffs go all out, develop the maximizing individual's ability to achieve budgeting target.
3.1.3 Provide good communications
Budgeting provide a bridge of communication. Due to budget is the product of all staffs involved in the planning rather than the single program instruction by the operator or senior management, manager and employees can have a good communication with each other in this process. Therefore constitutor can understand the employees demands, opinions and their expects, attitute to company, in the meantime, providing a chance to company to give the ideas to staffs and finally reach a consensus, eliminating the barriers in the implementation of the plan.
3.1.4 Promote coordination
coordination deals with the interests of the organization as a whole, meshing and balancing the factors of production and other departments and functions so that objectives can be achieved. Budgets aid coordination because they require well-laid plans and isolate any problems. Adjust business activities to match their internal conditions and external environment.In the competitive environment, enterprises want survival must continue observe and adapt to the changes in the external economic environment, budgeting can enforce supervisors analyse dynamic situations constantly, thereby, make the best decision.
3.1.5 Control situations dynamic
Implementation according to established goals
In the process of the implementation of budgeting, manager pay attention on whether the operating of business activities go against the final goal and this against activities can be allowed or not. If it can not be exist, then, manager can take necessary measures to correct the error make the activity continue walk along the right way.
Through the feedback information understand the problems and barrier in budgeting
Through effective performance evaluation and information feedback to better understand the reasons why the difference occur and based on the problem take correct measures to achieve budget targets.
3.2 Criticisms/problems of budgets
3.2.1 Lacking in strength çÂª-äÂ½"éÂ¡Â¶çÂ«Â¯
On one side, lacking in strength to arrange limited resources, it outstand performance in: stakeholders hold different enterprise resources, allocation of resources in the budgeting always influences by the individualism and preference of the small groups. Resource allocation lack of standard, can not support the extension of business strategy activity and reach maximum profit. On the other side, enterprise financial budget without centering on enterprise's strategic requirements and development program. In the implementation of the analysis of budgeting analysis, the related departments and units lack a broader view and cooperation consciousness, one-sided think analysis of budgeting implementation is just financial problems. Leading to budgets only stay in simple financial index instead of analyse deep reason thoroughly.
3.2.2 Remains of large deviation between budgeting and operation
Budget in the business hasn't enough power of monitoring, lead to the budgets operational process just in surface, can not constrain the operational activities. In addition, exist situations of arbitrary adjust budgets frequently. Just emphasize the managing work of accounting department, ignore the perfection of budget managing organization. Budget organizes framework of managing system and point out the starting point, however, a lot of companies failed to establish distinct budget organizational system, budget preparation and adjustment work falls on accounting department, other departments may have not really involved in the budget preparation, control system. Causing budget management lack authority and foresightedness, difficult to express the function of financial budget control.
3.2.3 Lack of precision
This is mainly because companies in the budget managing process, only emphasize short-term activities, ignores long-term development goals, causing poor cooperation of each period of financial budgets, meanwhile, its index of budgets dose not adapt long-term development of the enterprise strategies. In addition, some companies using historical index and activity basis to determine the budget index, have not serious evaluate the future of the company activities, If the enterprise and their departments changed a little, this kind of activities for budget planning method passable accept, If the enterprise and their departments activity vary considerably, this budgeting may lack objectivity.
3.2.4 Focus on curtail expenditures
Pay attention to curtail expenditures instead of reasonable arrangement. Most people consider the main objective of implementing budgeting management is to through a budget to control costs, to make expense doesn't exceed the budgeting. In this guidance, many enterprises stipulated reward and punishment system according to cost overruns or save. Nevertheless, the result is some departments get reward by save costs, at the same time, some necessary activities were cut or has already happened cost are not register and generates a phenomenon that reduced work but be rewarded. This is against the purpose of budgeting. Moreover, in the implementation of the budgeting management always lack of assessment and incentives also reduce the employees' enthusiasm to take part in budgeting.
3.3 Behavioural aspects of budgeting
For the successful operation of a budget system attention needs to be given not only the technical characterisitic but also to the so-called"behavioural aspects' of budgeting.
3.3.1 Budgeting effect performance
Certainly, behavioural aspects of budgeting and performance (The working responses that employees to budgeting) can not be separated. Establish a budget is in order to achieve the ultimate purpose of the enterprise management. Then a quit successful budget means it can stimulate the employee's potential, fit the staff's career goal, and adapt with the enterprise strategy mutually. Observe the difficulty level can get such a conclusion: If the budget difficulty degree is add from easy to difficult gradually , when it is very simple the employees' working performance will be higher than expected results, as add of budget level increase gradually, performance will also rise but rises slowly and might be lower than the figure of budget expectations. However, when the budget into difficult phase, the performance scores may drop dramatically.
Good budget could increase staffs' activeness, make them work behavior have more perception to budget target and coordination. Conversely, unreasonable budget will greatly reduce their working motivation. Budget's draw up can promote more acts of cooperation and communication from personnel in different departments. If the budget goal is very clear, it can help to achieve the goal better and faster; If the budget goal is not clear, communication not in-depth, then employee behavior may violate objectives, because people could not be looking forward to finish the goal that they do not know or don't understand. In addition, budget can prompt feedback, through the feedback to adjust enterprise's behaviour is very necessary , it also an important guarantee of the long-term development of the enterprise.
Budgeting have function of forecasts, each department's participation can save a lot of money and a lot of time those spent on unnecessary problems. When employees start take acctions according to the budget, it also the time to match their own goals and company goals. A better behavior advantage is departments involved in prediction can improve quality of forecast, manager through update the informations from each department could better predict current condition better,meanwhile, predict the situation changes, make budgeting always keep forward development trend and powerful.
When the budget process has been operate and onform to fact situation very well, then, it can let a person produce more aspirations, longing to over fulfill the goal. With the completion of target budget, all individuals' ability in company have been improved, already able to handle more situations to achieve maximized interests. So, with this improve, next target will become higher and further, using new earned knowledge and experience can help companies' operation become more perfect, occupy more favorable market position, thereby, to achieve desire to target.
Preparation of budgeting need enterprise's cooperation between departments, therefore, budget illustrates relevant people reach an agreement in the enterprise's future managing target. It is a important tool to communicate in interior of enterprise, make every departments linked together closely, at the same time can let each departments depend on themselves' situation deciding should what should do. The setting of budget goal can reflect the performance standards in the industry, through compare the company's performance level and industry standard, make them understand themselves more clearly, even can be used on internal evaluation in enterprise . Budget is control tool, predict tool, operator according to feedback informations change constantly, appropriate correct the measures, insight into business' strengths, weakness, opportunities and threats. Budget can rise the incentive effect, no matter employees or managers are complete goals actively. It can promote strategies of enterprise carry out more effectively , can reduce financial costs, promote enterprise income growth, help enterprise set up marketing strategy, supporting the sustainable development of the enterprises.