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Budgets Necessary In Life And In Business

1603 words - 7 pages

INTRODUCTION

A budget is a statement showing the quantity or monetary value of planned activities and is prepared and accepted before a given period of time known as the budgetary period. It is the summary of how much is spent as compared to the much that is earned over a given period of time. There are different types of budgets. They include; sales budget, purchases budget, direct labor budget, direct raw materials budget.

A budgetary performance is the difference between actual and standard performance and it can be shown using the variance analysis. It can be adverse or favourable depending on how it impacts the profits of the firm.

Ethical behavior is important in life. It is not only important for the business but is also important for an individual in his private and personal life. Being ethical simply means doing the right thing at the right in the right way. Ethical behavior deals with the rights and wrongs of one’s’ personal life or organizational life. The behavior has to be acceptable in the society. However, it is important to note what is right for one individual me be wrong to a group of individuals and wise versa.

Ethical behavior in a business scenario deals with several aspects. In business, being ethical is being honest, maintaining the discretion, veracity (personal and corporate) and attaining objectivity.

Linda Lewis is a division head, she is a leader and therefore she holds a position of trust to her superiors, headquarters and also her subordinates. Due to this she is expected to be of high integrity and honesty to them which however she is not. The reason for the standards set by the company is not only to motivate the employees but also for control purposes. The effect for over estimating expenses and underestimating revenues lowers the standards since the budgeted profits would be low and hence easily achievable. Linda believes that the action is justified because it increases the likelihood of receiving bonuses. This behavior of hers questions her honesty and integrity.

Secondly, she instructed the sales department to defer the closing of a number of sales agreements to the following fiscal year. She also decided to write off some inventory that was nearly worthless. Deferring revenues to next year and writing off the inventory in a no bonus year increases the chances for a bonus next year. This is absolutely unethical and a cheat to the firm as a large. She is the one leading her subordinates towards a wrong path, that is the sales department. Linda is playing around with the trust the faculty at large has placed on her.

Linda Lewis behavior is totally immensely wrong. Her actions have betrayed the trust and high moral integrity placed on her by her superiors and subordinates. Apart from that, her justifications for her actions on the grounds that it keeps morale of the managers high has no moral ground to stand on. This is because it may actually demoralize employees who value...

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