By Steven M. Bragg,Edwin Burton
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Extra info for Accounting and Finance for Your Small Business
First, define responsibility. You need to know who will be responsible at various stages in the proposal’s implementation to ensure accountability and control. qxd 11/28/05 1:37 PM Page 47 Investing in Long-Term Assets and Capital Budgeting CHAPTER 2 match their abilities to the needs and responsibilities of each key position in the implementation process. Few things affect the failure or success of a product more than the match or mismatch of key personnel at critical steps in project implementation.
This concept can also be extended to work-in-process (WIP) inventory, where the installation of advanced production planning systems, such as manufacturing resources planning or just-in-time, can be used to reduce the level of required inventory. All of these assumptions should be clearly delineated in the inventory budget, so that the management team is clear about what systemic changes will be required in order to effect altered inventory turnover levels. qxd 11/28/05 1:37 PM Page 29 Budgeting for Operations CHAPTER 1 Given this input from the inventory budget, the production budget is used to derive the unit quantity of required products that must be manufactured in order to meet revenue targets for each budget period.
One method for integration is to have each manager participate in establishing and maintaining the objectives and goals. The test of reasonableness should apply. That is, there should be a reasonable likelihood of obtaining the objective in order to motivate compliance. qxd 11/28/05 1:37 PM Page 22 SECTION Preparing to Operate the Business I An element that often impedes effective budgeting and attainability is the inability to identify controllable and uncontrollable costs or expenses. Controllable costs should be identified and targeted.