Possible Effects of Budget Preparation on the Behavior of Laundry Essay

Possible Effects of Budget Preparation on the Behavior of Laundry Supervisor - Essay Example This research will begin with the possible effects of budget preparation on the behavior of laundry supervisor. Budgets fall under the category of responsibility accounting. The reason they are given this name is because laundry supervisor can be given enough discretion to manage her own department and at the same time she will be questioned on any results that were below the budgeted performance. It helps the higher level management is focus on their core competencies and organizational planning, setting up strategic goals and looking after other more important aspects of the business by giving the duty of performing day to day budget of one department within the organization to its supervisor. This is a motivational thing for the department supervisor as well. She will try to beat her own budget and achieve better performance if the budget achievement is linked with performance rewards. The current budget preparation process has certain big flaws. First of all since people closer t o the action were not consulted before making the budget, a lot of useful information would have been omitted from the budget preparation process. This is particularly bad as the supervisors might not be able to achieve their targets because the budget was not realistic and all blame will fall on the supervisors. Similarly, it will be impossible to link the laundry function of the organization with other functions. This will create negative synergy or less result from more effort. Certain functions of the laundry department and costs of laundry departments are linked with the results or decision taken by other departments. For example, it is the nursing department that decides on how frequently it will change the bedding of the patient. If they decide to change the bedding daily, whereas the budget was prepared keeping in mind that the bedding will be changed not before three days, then the costs of the laundry department will rise. If no alteration is made to the original or planne d budget than laundry supervisors will not even try to achieve the budget and their negative feelings towards the organizations will be reflected and translated to the entire organization. This will result in the performance decrease in the entire organization. Any variation in the budget should be investigated only when it is material to investigate the scenario. For example, a lowly amount of $10, even if the change is more than 5% should not be undertaken because the entire investigation process would further waste the resources of greater than $10. Hence, lowly amounts are not worth investigation and only those amounts which are large enough to contribute to the organizational saving should be investigated. In other words variances should only be investigated if the cost of doing research is less than the benefits obtained from the investigation. The current process of budget preparation is that each department has to look after the