Managerial Accounting: Budgeting, Zero-Based Budgeting & Analysis

This report provides a comprehensive overview of budgeting within managerial accounting, exploring its significance in organizational financial planning and control. It examines the concept of budgeting, its steps, and the importance of incorporating modern tools and inflation considerations. The report analyzes two case studies: the role of budgeting in hotel management companies and the implementation of zero-based budgeting in the private sector. Similarities and differences between traditional and zero-based budgeting approaches are discussed, highlighting the importance of budgetary control, forecasting, and evaluation. The learning outcomes emphasize how budgeting aids in financial goal setting, strategy implementation, and organizational communication. The report concludes that effective budgeting contributes to operational and financial efficiency, enabling organizations to allocate resources strategically and achieve their financial objectives.

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
The aim of the project is to determine the concept of budgeting and the various impact it has on
organizations. The concept of budgeting is important in every organization and in every step of
business. The topic Budgeting is given and discussed in brief. The two case studies involved for
studying in the assignment were the Importance of Budgeting in Hotel Management Companies
and the other article selected was the Implementation of Zero Budgeting and its role in the
private sector. The similarities and the difference between the articles were studied in the
assignment and the learning outcomes derived from the same is discussed.

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Table of Contents
Introduction......................................................................................................................................3
Discussions......................................................................................................................................4
Concept of Budgeting..................................................................................................................4
Analysis of Research Paper Included..........................................................................................5
Similarities Observed...................................................................................................................8
Learning Outcomes......................................................................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

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Introduction
The concept of budgeting involves creating a plan for the execution of capital and
revenue expenditure in the due course of the business. The spending plan and the development of
a expenditure is called budgeting. The concept of Budgeting is important in every aspect of the
business organizations irrespective of the size and nature of the business. The budgeting aspect
and the importance of the same in the hotel management companies is also one of the main and
important factor considered and discussed (Kovaleva et al. 2016). The Private sector
organizations and the use of budgeting by the management with the concept of zero based
Budgeting in the private sector is discussed in the assignment. The concept of traditional
budgeting and modern way of budgeting, which incorporate several data and information
required for the process of budgeting, is well discussed and elaborated. The key findings from
the articles were the budgeting methods and techniques used by the management and the
industries for forecasting and implementation of the budgeting process and the overall cycle of
Budgeting (Bader, Nawaiseh and Nawaiseh 2018). The implication and the cost of zero based
budgeting as a technique and the approval of the same and the dispersion of the same from the
original budgeting is covered in the first article of the report. The use of zero based budgeting
historically the ethos and the techniques applied for the same in different kind of organization
forms a subsequent part of our articles. The concerns relating to use of zero-based budgeting as
well as its conflict with the traditional method of budgeting is addressed (Tian et al. 2015). The
learning outcome derived from the research papers were that the process of budgeting helps in
planning of important financial goals of the company, helps in implementation of a particular
strategy, communication and coordination in an organization(Gachoka et al. 2018).

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Discussions
Concept of Budgeting
The Budgeting as a process and ways are defining and setting up financial goals,
forecasting the needs and requirement of resources by the company in the due course of the daily
operating activities, monitoring and reviewing the capital and revenue expenditure and income of
the company and evaluating the progress in the same for achieving financial goals of the
company (Gachoka et al. 2018). The steps involved in the process of budgeting involves are:
 Setting up Financial Goals for the company.
 Gathering useful informations and data for the company in the application of the
budgeting.
 Forecasting the demands and financial resources for the company, which would require
judgment analysis by the management of the company.
 Implementation and setting up the budget
 Improvising on the expenditure done by the company.
 Evaluating and reviewing the performance of the company.
Budgeting involves identifying key components of revenue and expenditure and the
dispersion of the same in their previous years as in the trend form. The divisions and the
segregation of the same in the forms of income, expenses and the net amount saved by the
company will help them focus on the key component playing a pivot role in the company
(Grossi, Reichard and Ruggiero 2016). The management of the fixed and variable expenses
by the company is also one of the key factor in the expenditure in the company. The use of
modern tools of budgeting should be incorporated by the organization for helping them

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forecast and analyze the process of the budgeting. This involves forecasting of expenditure
and income of the company, scenario analysis by the company in the form of different stages
of the business cycle of the company and the use of other integrated software tools. Inflation
is a key concept that should be incorporated in the budgeting while assessing the expenditure
and the various sources of income for the company. The term inflation reflects the fall in
purchasing power of a commodity with a general rise in the price level. Inclusion of Inflation
in the expenditure in the form of increasing the expenses by the predicted amount of inflation
in the near future and due course of the business will help them better assist the financial
needs and conditions of the company (Warren and Jack 2018). Proper reviewing and
monitoring of all overall budgeting procedure will help them asses the quality of the
budgeting methods deployed by the company. The budgeting concept on an overall helps in
maintaining an operational and financial efficiency in the company. The company recognizes
the key aspect of the budgeting such as the allocation and utilization of resources,
anticipating and taking actions ahead. The strategy and goals of the company is predicted and
is useful when the company is preplanned for the operations (Zhao 2016).
Analysis of Research Paper Included
The first research paper deals with the Hotel Management companies and the forecasting
and the budgeting practices involved. The assignment involves the current practices deployed by
the US hotel management industries and the practices they involves for forecasting and
preparation of the budgeting. The methodology involved in the study-included survey of key
executives of the hotel management companies in the USA (Cokins and Dybvig 2018). Use of
Chi square test and T test was done for treatment and finding of equality of mean between the
large and small data collected i.e.to identify the difference in the large and the small-scale hotel

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management companies. The finding from the article involves the identifications of the concepts
used in the hospitality industries. The key finding was to analyze whether the current budgeting
and forecasting tools deployed by the hospitality industries is currently improving the growth
prosperity for the companies. The opportunities involved in the time efficiencies and the whether
there is a proper time management from these process. The significant difference arises in the
budgeting and the forecasting process in the hotel management industries between the large and
small-scale companies (Broccardo et al. 2016). The difference between the companies generally
arises on account nature and size of the business. The requirement for the capital revenue and
expenditure is different for different size of the companies. The research implications and the
limitations of the paper is elaborated. The future research done focuses on the identification of
the economic factors and the influence the revenue generation by the management of the
companies at the different levels of operations like the local or the regional level (McVay 2015).
The future research process may include the focus and the importance of the of the modern
equipment tools which helps in better assessment of financial needs. The practical application
and the usage of the study is to recommend and implement a centralized budgeting process
which would bring about efficiency, improve accuracy in the forecasting and allowing the
flexibility in the spreadsheet for exploring of various scenarios. The overall findings,
contributions and the process for the paper was obt5aining the inputs from corporates, key
executives of the hotel management companies and the operations of the same in the USA
(Kamau, Rotich and Anyango 2017). The forecasting, analysis and the documentation of the
budgeting process which involves analyzing the key financial components of companies in the
form of revenue and expenditure key elements were identified in the project. The forecasting and
the development of the budgeting process will enable the company implement proper strategy for

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achieving the financial goals and the prosperity of the company. The Operational Budgeting as a
process and as a system involves the important and the crucial part of the firms accounting policy
and systems and for creating an organization structure and architecture for the same. The
budgeting as a process refers to the transformation of the company strategic plan into an
measurable unit form. The budgetary process for an organization is the effort applied by the
company in quantifying the amount for the utility of the resources by the company (Pathak and
Dzigbede 2016).
The second article included in the assignment is the concept and implementation of zero
based budgeting use a management important tool in the private sectors. The research paper
examine about the validity and the use of the zero based budgeting that is used by the
management of a company as a budgetary process. The zero based budgeting starts with the
evaluation of a budget from the beginning or from the base level the steps for the same involves
use of different components of the cash flow statement of the companies and justifying and
analyzing all the expenditure of the companies which is incurred I the daily operations of the
business. The zero based budgeting in the private sector goes for the zero based budgeting where
every expenses of the new period is examined and determined on the base of the actual amount
of expenses that are incurred. In the traditional form of budgeting the past trend analysis is the
main factor included whereas the zero based budgeting includes balances that are carried forward
in the next period and no expenses part is pre-committed. The study evaluates the applicability
and the usage of the zero based budgeting as a management tool and the same used by the
company as an investigate and determines the usefulness of the process in the field of
determining the key performance done by the management of the company (Callaghan, Hawke
and Mignerey 2014). The research crucially identifies that the traditional budgeting process over

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the modern form of budgeting for the use of the quality data that might be useful in the analysis
of the budgeting and to highlight the important budgeting steps and decisions. The paper
includes historical survey of the use of the zero based budgeting in the profit and non-profit
organizations to examine and execute the different techniques applied by the company. The
chapter further introduces for the budgeting procedures of implementation of Babcock and
Wilcox and the presentation for the expected benefits accruing for the use of the Zero Based
Budgeting. The paper also refines a survey for determining the extent of the usage of The Zero
Based Budgeting in different corporations and organizations. The Zero-based budgeting is a
comprehensive and a self-evolving tool than a merely budget evaluation tool. The application of
the zero based budgeting was seen first by the Texas Instrument in the early 1970s. Integration of
key managerial functions like the controlling of operating activities and planning of strategy to
different kind of performance evaluation is the key factors discussed (Muhammed and Kinge
2016).
Similarities Observed
The article paper discussed and analyzed above shows the importance of the budgeting
as an effective tool in the operations of the company. It is for the long-term alignment of the
company that can result and bring the growth for the company if there is proper deployment of
strategy and planning structure laid down by the management of the company. The key focus on
the first assignment is on the budgetary control, forecasting and evaluating or overviewing the
budgetary process. The second article focuses on the usage of the zero based budgeting by
dividing the income and expenses of the company and identifying the key factor that influences
the budgetary process and the overview and the performance of the same in the form of the trend
analysis (Popesko et al. 2016). The key difference observed in the articles were that the first

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articles focuses on the traditional form of budgeting and the second article focuses on the modern
concept of budgeting as an assessment tool for analyzing the performance of the company. The
nature and the size of the business was considered one of the key factor while analyzing the
needs and operational part of the companies operating in the hospitality sector. The second
article gives a uniform base and model irrespective of the size and nature of the business (Segun
and Olamide 2015).
Learning Outcomes
The learning outcomes learned from the two studies are:
Strategy and Goals: The key aspect of the budgeting involves implementation and
incorporation of planned activities of the companies in the form of the strategy and goals of the
company. The same has been discussed in both the article where the budgetary process should
have a strategy to start with and there should be a strategy for the implementation of the same
(Sandalgaard and Nikolaj Bukh 2014).
Anticipating and Forecasting: The key aspect of the analysis involves anticipation and
forecasting of the important data and resources required in the process of the budgeting. The
anticipation of expenses and income for the company helps them in assessing and distributions of
the budgeting components (Pinjari et al. 2016).
Monitoring and Evaluation: The key aspect of the budgeting is to judge whether the budgeting
process involved is self-effective or not. The budgeting process involves the use of planning and
strategy implementation. The use of the same by the company in the different levels of the
company.

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Utilization and Allocation of Financial Resources: The deployment of financial resources and
the utilization of the same were the key elements addressed in the articles. The financial resource
of the company and the application for the same in the analysis and evaluation of budgeting
process were the key aspect of the articles studied (Klychova, Faskhutdinova and Sadrieva
2014).
Conclusion
The financial analysis and the key aspects of the budgeting evolving around is a key
aspect in determining the budgetary process. The concept of budgeting is well discussed in the
analysis portion of the project. The budgeting aspect plays a different level in different kinds of
organization and structure it is the size and nature of the company, which plays the budgeting
impact on the company. The concept and importance of budgeting is important to understand the
implications of the same in the role bad in the form of strategy by the management of the
company. The long-term success and alignment of the growth and profitability implies by the
budgeting played as a role of planning in the prospect of the company. The budgeting role helps
in determining the allocation and deployment of proper funds in different aspects of the
company. The planning stage helps in setting up strategy and goals for the company and helps in
the Anticipation and forecasting of long term and short term financial and operational goals for
the company. The utilization and allocation of financial resources is better done with the help of
the budgeting and the company can better utilize and efficiently allocate resources. Breaking
down the various components of the budgeting into expenses and income and recognizing the
key factor among them is also a key factor to analyze for the company. The importance of
modern budgeting plays and important and crucial role over traditional form of budgeting in an

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organization. The modern tools of budgeting plays an important role and gives much more
classified form of information to the company in assessing and analyzing various aspects of
financial and operational levels of the company. Thus there are different budgeting role and
aspects that can be played in the company by different strategies of budgeting deployed by the
company.

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