-understanding the basic cost terms as well as ethics.
referring to page 400 of textbook.
-Is it in best interest of self/city
-Framework for ethical decision making – textbook
-who will be affected. Do good/harm to different group of people -in difficult situation
- why does am have to overbudget. Suggestion to improve, by city governer.
real life examples. Allowed if under supporting evidence.
Covering topic : Introduction to managerial accounting
Budgetary Planning and Control.
Ann Paxton is the manager of the waste treatment facility for the city of Columbus Park, Illinois. Ann is in the process of preparing the Annual expense budget. She is thinking that her costs for the next year will be around $3,200,000 but she is thinking about budgeting for $3,900,000. She is sure that the city controller will reduce her budget by 10%, and new contracts could increase costs or waste could be more gallons than budgeted. She wants to make sure that her costs are not more than she budgeted because she wants to make sure she will still have a chance at a promotion. An Annual expense budget is a budget that will estimate the costs of the waste treatment center for the coming year. As with any budget this is a formal document that represents the company’s plans for achieving the goals. With any budget there are budget variances expected. A budget variance is the difference between the budgeted amount and the actual costs occurred. This is a practice that happens often in companies where costs are budgeted higher to cover unexpected costs. This isn’t illegal and can be done. Is this practice ethical. This depends on how much higher the costs are increased. In cases of budgets the figures are estimates of what is expected and you should allow for unexpected costs like increase in contract prices or more customers than expected. In this case it would be more waste gallons produced than what is estimated. What Ann is considering is...