Impact of Budget on Company Morale

In this post, you will get the idea how budget affect company morale and how budgetary process be made more beneficial to avoid any negative impact a budgetary concept can portray. You will get the answer of the follwoing qyestions :

1. How can a budget affect company morale?  How could the budgetary process be made more beneficial to avoid any negative impact a budgetary concept can portray? 

2. How does contribution margin differ from controllable margin in a responsibility report for a profit center?  How do controllable costs and non-controllable costs impact a manager's budget and decision making process?

Answer 1

Impact of Budget on Company Morale

A budget has both positive and negative impact over company morale. The budget padding, in which management considers unrealistic targets, reduces the employee morale and consequently company morale. On the other hand, a budget with accurate targets and measures increases employees’ effectiveness to perform their tasks that causes an increase in company morale. The bottom-up budgeting also provides benefits to the company in term of morale as it involves several people in making budgets (Sottini, 2009). On the other hand, top-down approach of budgeting process reduces company morale as budgeting process is performed by top management only without considering the other employees.

Elimination of Negative Impacts of Budgetary Concepts

The budgetary concepts may pose different negative impacts over an organization. In order to eliminate these negative impacts, the management of an organization should follow the bottom-up approach of budgeting. This budgetary concept will involve all the employees in making budgets and will facilitate more effective utilization of resources (Sottini, 2009). At the same time, it will also be effective to determine the appropriate measures and targets for the employees that would cause an increase in the effectiveness of employees and consequently organizational profitability. 

After reading of the Impact of Budget on Company Morale, You must read the Total Quality Management (TQM) because TQM refers to management methods used to enhance quality and productivity in organizations. 

Answer 2

Contribution Margin & Controllable Margin

The contribution margin determination distinguishes between fixed and variable cost in reporting the management. It can be defined as the difference between sales price and variable cost. On the other hand, controllable margin can be defined as the contribution margin less controllable fixed cost. The responsibility center reports for a profit center, in which, it defines controllable margin that is computed by deducting controllable fixed cost from the contribution margin, while the contribution margin is computed by deducting variable costs only (Weygandt, Kimmel & Kieso, 2010). Any type of fixed cost, whether controllable or not, is not deducted to calculate contribution margin.

Impact of Controllable and Non-controllable Costs

The controllable and non-controllable cost has significant impact over the budgeting and decision making process of management. it is because; managers are directly responsible for the profit remaining after subtracting all the controllable expenses. The budget is prepared by considering the controllable costs as appropriate and sophisticated cost system helps to increase the proportion of controllable cost in the business (Pizam, 2005). The controllable and non-controllable costs also help to determine the accurate cost of output that helps the mangers to make the unit decisions. Thus, controllable and non-controllable cost increases the effectiveness of managers in budgeting and decision making.

References 

Pizam, A. (2005). International Encyclopedia of Hospitality Management. Butterworth-Heinemann.

 Sottini, M. (2009). IT Financial Management. Van Haren Publishing

Weygandt, J.J., Kimmel, P.D. & Kieso, D.E. (2010). Accounting Principles (9^th ed.). John Wiley and Sons.

If you need any help with this paper or any other work  then do let us know. We would be very happy to solve your assignemnt. We assure you that you will get 100% original and quality work from our side.

If you have any query or question related to your homework or assignment then do contact us.

Our email id is: info@homeworkhelpexperts.com
 
We are available 24x7 in a week or tell us your phone number we will call you or you can call our toll free phone number : 001-877-839-9989

We provide Best Online Assignment help.