Conflicts often arise during the planning process and control of budgeting. During the planning phase Organizations need to be cautious so that the projection numbers need to be finite and perfect, which will lead to good results. The process of the control process needs to assess the performance of employees by comparing the actual results with the operating budget. Employees must decide between doing the best for themselves and doing the best for the organization.

Suppose you are a computer manager at High Tech Retail, Inc. You were asked to help prepare a budget statement for the computer department. In each fiscal year, managers will receive a bonus equal to 10 percent of net revenue that exceeds net budget revenue.