Human behavior and budgetary control, Managerial Accounting

Assignment Help:

Human behavior and budgetary control

An important feature of control in business is that control is exercised by managers over people. Their attitudes and response to budgetary planning and control will affect the way in which it operates.

In 1953 Chris Argyris identified the following four perspectives of budgetary control:

The budgets are seen as a pressure device used by management to force lazy employees to work harder. The purpose of such pressure is to enhance performance but the unfavorable reaction of sub-ordinates against it seems to be at the core of the budget problem.

Budget men desire to see failure. The accounting department is usually responsible for recording actual achievements and comparing this against a budget. Accountants are therefore budget men and their success is to find significant adverse variances and identify the managers responsible. The success of a budget man is the failure of another manager and this failure causes loss of interest and declining performance.

The accountant, on the other hand, fearful of having his budget criticized by management deliberately makes it hard to understand.

Target and goal congruence. The budget generally sets targets for each department. Achieving the departmental targets becomes of paramount importance regardless of the effect this may have on other departments and the overall company performance. This is the problem of goal congruence.

Management style. Budgets are used by managers to express their character and patterns of leadership on sub-ordinates. Sub-ordinates resentful of their leader’s styles blame the budget rather than the leader.


Related Discussions:- Human behavior and budgetary control

Relevant costs for non-routine decisions, RELEVANT COSTS FOR NON-ROUTINE DE...

RELEVANT COSTS FOR NON-ROUTINE DECISIONS A relevant cost is a cost that is appropriate to a specific management decision. To be relevant, a cost should be: 1) Future cost

Identify and briefly describe four trends in macro market e, identify and b...

identify and briefly describe four trends in macro market environment which influence on the selected industry?

Transportation problem-solution, Transportation Problem-Solution Soluti...

Transportation Problem-Solution Solution of the Transportation Problem: The fundamental steps of the transportation method are: Step 1:       Determine a preliminary b

Industrial Grinders, accepted#Regarding the Overhead costs, these are alloc...

accepted#Regarding the Overhead costs, these are allocated based on Direct Labor;

Non-zero lead time, Non-zero lead time (determining reorder point) This...

Non-zero lead time (determining reorder point) This basic EOQ model assumes that the suppliers lead time is zero (i.e. goods are delivered immediately on the day the order was

Illustration of abc analysis, Illustration: ABC analysis Combine items ...

Illustration: ABC analysis Combine items on the basis of their relative value to form three categories—A, B and C. The data in the table below illustrates the ABC analysis.

Accounting period, 1. In common, accounting period is the time period refle...

1. In common, accounting period is the time period reflected by a series of financial statements.  2. In terms of taxation, it is twelve-month period a taxpayer uses to know

International transfer pricing, International Transfer pricing Internat...

International Transfer pricing International transfer pricing refers to the determination of prices to be charged between related persons and in particular within a multination

Full service non recourse, Full Service Non Recourse: in this method the b...

Full Service Non Recourse: in this method the book debts are purchased through the factor assuming 100 percent credit risk. In case of default through the debtor the whole risk is

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd