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Boston Creamery Inc. Recommendation Essay

253 words - 2 pages

For 1974 budget planning, managers should get together and do a better job in preparing the budget. It would be a good idea to classify costs as controllable or uncontrollable and also to adjust the budget for these uncontrollable events when they happen or at least before the variance is calculated.
Also in this case it is unclear whether the ...view middle of the document...

Therefore, it is suggested that for 1974 when the budget is prepared, they must also make it clear what the responsibility of each manager should be and how they will be held accountable. It is better to set those standards in advance using a combination of top down, bottom up approach rather than what seems to have happened in this case, a top down prepared budget where the managers are told after the fact how they performed.
The variance analysis can be a useful tool in assessing trends and to get an idea of where there might be a problem. However, in the real world nothing is black or white. There are several weaknesses in the system, good standards are difficult to achieve, and there is a need for additional information to assess whether a deviation is a problem or not. Variance analysis should be one of many tools used to evaluate managerial performance and not the only tool.

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