Assignment Exercise 152: Budgeting

Find an existing budget from a published source. Detail should be extensive enough to present a challenge. Required

1. Using the existing budget, create a new budget for the next fiscal year. Set out the details of all the assumptions you needed in order to build this budget. 2. Use the Checklist for Building a Budget (Exhibit 152) and critique your own effort. 3. Use the Checklist for Reviewing a Budget (Exhibit 153) and critique the existing budget.

Exhibit 152 Checklist for Building a Budget

1. What is the proposed volume for the new budget period? 2. What is the appropriate inflow (revenues) and outflow (cost of services delivered) relationship? 3. What will the appropriate dollar cost be? (Note: this question requires a series of assumptions about the nature of the operation for the new budget period.) 3a. Forecast service-related workload. 3b. Forecast non-service-related workload. 3c. Forecast special project workload if applicable. 3d. Coordinate assumptions for proportionate share of interdepartmental projects. 4. Will additional resources be available? 5. Will this budget accomplish the appropriate managerial objectives for the organization?

Exhibit 153 Checklist for Reviewing a Budget

1. Is this budget static (not adjusted for volume) or flexible (adjusted for volume during the year)? 2. Are the figures designated as fixed or variable? 3. Is the budget for a defined unit of authority? 4. Are the line items within the budget all expenses (and revenues, if applicable) that are controllable by the manager? 5. Is the format of the budget comparable with that of previous periods so that several reports over time can be compared if so desired? 6. Are actual and budget for the same period? 7. Are the figures annualized? 8. Test one line-item calculation. Is the math for the dollar difference computed correctly? Is the percentage properly computed based on a percentage of the budget figure?

ESTIMATED BUDGET FOR THE Publication House Exchange rate: TBD Next fiscal Average unit Costs (in Estimated Estimated Expenses Unit Number of units rate EUR) budget () budget (e) in EUR 1. Human resources 1.1 Salaries Salaries increase at 10% 26400 13200 6600 11.1 Research Proiect Team Salarv for technicians Salarv for scientistst Salary for assistants month month month 12 12 12 2000 24,000 1000 12,000 500 6,000 24,000 12,000 6,000 Subtotal Human Resources 1. Per diems 1.1 Accomodation/hotel expenses (nights x unit rate x 42,000 46,200 Meals reamins same to 250 and the unit rates increase by 5% Per night 122 250.00 30,500 30,500 30,500 ersons 1.2 Meals (lunches/dinner x unit rate x persons Per meal 250 200.00 50,000 50,000 52500 Accomodation expenses are same Subtotal for per diem 2. Travel 2.1 International Travel 80,500 83,000 All trip rates are adjusted for ilation at 3% Per flight 250 5012,500 12,500 12875