BUDGET CONTROL

Budget Control

Budget Control

Relevance of the statements

First, the university was focusing and targeting the students of Thames Valley. Later, the university broadened its range to West London. It also changed its name. Therefore, it was targeting more students now. The need arose for the organization of a functional head. This was to be for the staff, building maintenance and other related areas. The CEO of the university divided the budgetary plan into three sections for profit generation. The support department was assigned the invoicing of teaching department. The main expenses of the university are admin staff salaries and general overheads. Cost manual produced by the support department and directing teaching staff salaries is also included in the cost. Government was also providing subsidy to the university for a limited number of students. The revenue generation came from the enrollment fee of the students. The budget is important for the organization to maintain performance and efficiency. The budget includes full and complete variance analysis and key performance indicators to achieve the required budget (Cowen 1979, 1).

Zero based budgeting

Zero-Based Budgeting is a technique used in budgeting for planning and decision making. It starts that no cost should be included in the budget just because of the reason that it was a part of the previous budget. Every item, only if it properly justified, will be included in the budget. This will enable the company to plan in a better way for the future. ZBB is a technique for making efficient decisions, which results in a way that making budgets and planning is not the sole responsibility of the budget officer and controller but, it is shifted to other key members. This is the reason that Zero-based budgeting is more successful through active and full commitment of the upper level management along with the support of the key members in an organization. The capital benefit of Zero-Based Budgeting is that its main focus in on the actual resources that are required to achieve a desired level of output rather than increasing or decreasing in the recent trends. This technique is helpful for the operational managers to work in an efficient way.

This technique creates a link between the finance and budget departments' executives in planning and making budgets. In order to minimize the problems in the zero-based budgeting implementation in any organization, top level management should start ZBB from the very lower level of the organization. This will also enhance the commitment level of the employees gradually. There are two distinguished characteristics of zero-base budgeting. Firstly, budgets are prepared separately in each organizational unit and secondly each unit's manager separately prioritizes these budgets at every level and, each higher level manager then again prioritizes the budgets through the whole line of the employees who are responsible.

That thing will ultimately affect the commitment level of the employees in the organization in a terrific way. ZBB is a technique that can only be successful through discussions in the organizations rather that conducting empirical type ...