Management accounting-Bias Budgets Coursework Example | Topics and Well Written Essays - 2000 words

Management accounting-Bias Budgets - Coursework ExampleQuestion One (a) Why do managers want to manipulate their budgets? after budget approval, the smart set may use it to carry out budgetary actions. As a result, the managers use it to ensure they carry out the organization objectives and plans and in the end, they have to compargon budget plan against the real performance. Once compared, the difference in amount is usually the budget deficient or bias which is gain by managers manipulation or distortion on the proposed budget. There are various reasons as to why mangers manipulate budget. Firstly, if the rewards and motivation finished performance evaluation help to achieve the budget results, the managers may end up manipulating the budget to include more of rewards in order they can contact the target more easily like league table and bonuses. Besides, managers are highly involved in cases of budget slacks-where organization set their revenue to be too low and a high cost, t he organization may end up losing sales since the resources required to raise production with the short time given have been limited. Moreover, the managers who have been promised some rewards on attaining certain goals set their target to be very low such that they easily attain them without caring whether the company looses or gains. Likewise, the senior managers dictate on a budget for performance. As a result, it forces the mangers to keep focus of resources on the performance of their surgical incision. Consequently, the mangers end up presenting a budget request biased on his department not for organization as whole. Hence, the direction of bias is downwards. Secondly, the companys practices and norms is subtle in determine the performance of the companys budget. Notably, prevailing work conditions help to dictate what is morally right. As a result, the management, which focuses on self-manager performances, will give incentives directed to managers alone. However, the mix a ccounting performance from his action is focusing on organization as whole. On the other hand, the management focusing on others gives a hard endeavor of degree of performance. As a result, it reduces the aggregate performance although it induces co-operation and collaboration to other firms. Moreover, when there occurs some change in the budgetary system from being top-down or centralized, and an acceptable estimate of growth is set, with the changing budgetary system to may be bottom up, and companys practices remaining similar, bias of outlander direction happens. Lastly, the mangers may feel insecure in their job and as a result, they are more than ready to use the budgetary trick when a chance arises. By this, it mean, the managers are quick to spend until the entire budgeted amount is consumed when the chance of buying goods occurs at a lower price. In fact, in the managers direct in the declining sales department makes use of entire budgets usage under the assumption that the future is uncertain. As a result, the budget becomes wasteful at the depreciate of the manager approving his need of upholding the job since the amount needed by the company and the bought one is very varying. Hence, strong upward bias occurs. (b) Why are they able to do? What are the constraints on such behaviour? As a long as the departmental budget exists, some head of the department will always try to game the budget. Additionally, there are numerous reason as