Operating Budgets Paper

Topics: Budget, Zero-based budgeting, Budgets Pages: 4 (1124 words) Published: April 23, 2011
Vicki Hinton
The Administration Process SEC/370
Michael Scott
University of Phoenix

Operating Budgets Paper
Budgets are systematic plans that organizations use to manage objectives and goals. They are important documents that bring out important aspects of the organization and provide information to direct that organizations activities (Johnson, 2005). They are basic planning tools that help managers make decisions within the organization. Budgets vary in different organizations by type and size. They are routine and an important part of any organization.

While discussing budgets, there were two that proved to stand out that I want to explore; Line-Item Budgets and Zero-Base Budgeting.
Companies use line-item budgets most because they are one of the most popular forms of budgets to use. Line-Item budgets use information based on the previous fiscal year or period. This format shows everything going out (spending) of the organization. Line by line things are, “increased or decreased based on present financial conditions, future goals, current and future financial conditions, and the current year’s profit and loss information” (Scott, Michael. 2011, p. 2, Para. 2). Any type of spending that the organization does is contained within this budget for example; labor and benefits. Labor and Benefits

Each employee’s salaries, overtime, pension, insurance such as medical and dental, and contract labor are figured into the budget. An example of salaries, overtime and contract labor being integrated into the budget is the Goodyear Tire and Rubber Company in Lawton, Oklahoma. My husband started working for Securitas Security Company out of Oklahoma City, Oklahoma. They contract their security officers to Goodyear. One afternoon my husband explained to me that they may not receive their raises next year because they had too much overtime this year. They watch how much over time is occurred and they base their next year’s wages on that (Hinton,...
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