Budgets (9)

Question 1

What are budgets based on?

Answer 1

Estimates of sales, production, materials, labour and overheads, and more accurate the estimates, more successful business will be

Question 2

How is performance of employees often evaluated/

Answer 2

By comparing actual results to the budget

Question 3

How can the budget process be manupulated?

Answer 3

To prioritise employee bonuses over the business as a whole

Question 4

An example of prioritising employee bonuses over the business as a whole?

Answer 4

Sales manager underestimating the level of sales to gain a bonus, which understates related production and purchases budgets. Business then runs out of inventory, affecting profit?