Harwood Medical Instruments Plc (Hmi)

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Solutions ACCT914 Seminar 6

������ What needs to be done to produce plans and budgets? Why are plans and budgets
important?
������ Explain the planning cycle.
������ What is a “good” budget target? Explain your answer.
������ MCS (Management Control Systems) Chapter
9- Financial Performance Targets

������ Explain the various types of financial
performance targets outlined in chapter 9.
������ How difficult a target should be set? Why? ������ What are the advantages and disadvantages of allowing participatory budgeting? How can the
disadvantages be minimised? 2

1 What are the three core elements in financial results control? Why is each element important? • Financial responsibility centres
• The apportioning of accountability for financial results within the organization. • Formal management processes
• Planning & budgeting to define performance expectations and standards for evaluating performance. • Motivational contracts
• To define the links between results and various organisational incentives.

2 What needs to be done to produce plans and budgets? Why are plans and budgets important?
• Produce written plans that specify …
o Where the organisation wishes to go;
o How it intends to get there;
o What results should be expected.
• Purposes of the planning and budgeting process?
o To engage in longer-term thinking;
o To achieve coordination (top-down, bottom-up, sideways); o To enhance management control;
o To arrive at challenging but realistic performance targets.

3 Explain the planning cycle.

|Direction |Budget Type |Process | | |Strategic |Relatively broad processes of thinking about the missions, goals | | |Planning...
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