CHAPTER ONE
INTRODUCTION
Organization exists in a complex environment. They therefore requires growth and forward direction for them to sustain their existence. This invoices articulation of the objective of the organization which can be budget the operations of the organization.
A budge specifies the objective it equally provides a system of monitoring the process of achieving them. Budgeting involves accounting process and managerial process. The accounting process mainly concerned with the performance of manger and others in the course of preparing and using budgets. These tow aspects of budgeting must be integrated to arrive at a decision. This translated the overall objectives of the organization into detailed, feasible plans of actions.
Budgeting is a process of qualifying organizations plans of action in monetary terms to show it’s expected income and expenditure during a certain period of time it is a feed forwards process which management uses to stimulated action for effective and efficient operation.
It is aimed at bringing numerous benefits over a range of time when adequately put into practices. The question is, do organization derive these benefits as aimed at when budgeting.
1.1 STATEMENT OF PROBLEMS
The state of Nigeria economy (that is the under developed nature of the economy) is the major problem facing Nigeria in general and organization in particular. Noticeable are the high depending ratio on imported materials. The over expenditure on oil and global glub in oil market, and the recently adopted foreign exchange market (FEM) resulting in a high exchange rate of naira (N). All these have negative impact on the economy.
As a corrective means, the federal government directed the manufacturing sector to back forwards solutions, thus stiffing the competitiveness in the suppliers. Therefore, organization ought to adopt effective and efficient method of operations if they are to survive.
The question is how to the manufacturing sector achieve this desirable fact, particularly in even changing and turbulent political social economic environment. This must be done through effective and efficient planning. They must budget their operation. However, budgeting as “a systematic and formalized approach for accomplishing the planning, co-ordination and control responsibilities of management”. It was some inherent problems and this study seeks to identify them.
1.2 AIMS AND OBJECTIVES OF THE STUDY
It is certain that most, if not all manufacturing companies make use of budgeting in arriving at decision, of which union auto parts, Ibe to Group, Nnwei, it is not an exemption. The researcher ratend to scrutinize the budgeting decision of union. Auto parts and compare it with the related literature to find out.
1) Whether budgeting as a management tool achieve what it is set to achieve in out manufacturing companies.
2) The creditability of using budgeting as a management tool a forecast operations.
3) The impact of the under developed nature of the economy on companies budgeting decision and practices.
1.3 SIGNIFICANCE OF THE STUDY
There exist evidence to show that the nations economy is depressed. The return on invest is declining daily in our companies causing reduced interest. In investment of individuals and corporate bodies.
This study is directed towards finding out ways in which budgeting decision and practice affects our companies and contribute to the profitability of their operations and management efficiency.
This study will further educate our present and future planner and implementers on the effects of their responsibilities and bring to time light the benefit denied by budgeting operations.
HYPOTHESIS
In every study of this kind hypothesis often time serve as guide tot eh researcher. It tend to serve as “assume answer to the principal question of the study, the correctors of which the assessed in the course of his study”.
The writer will study the following hypothesis.
1) Budgeting decision are functional tools of manufacturing companies is the topics of this study.
2) Budgeting practice enhance management performance
1.4 DEFINITION OF SOME TERMS
BUDGET APPRAISALS: This is quantitative valuation of the creditability and profitability of the budget.
BUDGET COMMITTEE: A formal group comprising of the functional heads. They are responsible for the determination of budget objective based on the analysis of past and current general data both externally and internally.
BUDGET REPORT: The sum total of either monthly or annual statement of budget as supplied by the functional heads and summarized by the budgeting office.
BUDGETARY IMPLEMENTATION: This is the actual execution of plans set in the budget.
BUDGET DECISION: A judgemental conclusion of action to be taken among the available alternative of the budget.
BUDGET PRACTICES: This includes the actual performance or carrying out what has been planned according to the budget
CAPITALISTIC ECONOMY: Any economy where individual as well as government has assess to means of production or are free to acquires and possess the factor of production kind capital and labour.
CURRENT BUDGET: Budget prepared for succeeding fiscal year or approval budget in force during the current fiscal year or assumed that the budget is prepared and adopted before the beginning of the year which it relates.
DECISION MAKER: These are people that makes the conclusive judgement of action to be taken
EFFICIENCY: The accomplishment of objectives at a minimum cost.
FORECASTING: This is the process of being able to predict future activities by analyzing the past and present operations or activities.
FUNCTIONAL MANAGER: These are the heads of the operational departments.
POLICIES: Plans of actions, statement of aims and ideal especially one made by the authority.