Introduction

This essay will show how through the explanation of a topic it is possible to develop different ideas about a given topic and based on research done and giving some examples it is possible to express different opinions but at the end of it, the process of learning this different ideas will improve given a clear opinion about the topics and having a clear definition of the subject in general.

In addition, the present essay is written with the aim of develop two main and important concepts as Budgeting and overheads. This two categories in the subject as Cost and Management will give a good start for the interpretation of how a company can manage different situations and how companies based on previous result can change and adopt different criteria to get the best result at the end of the period.

Through this essay it is possible to analyze different possibilities that can occur in an organization when the budget is planned and how this decision can change the personnel behavior towards the results for the company. This is ones of the main topic develop in the essay.

Furthermore, the essay will show how the allocation of overhead can change the results of the organization based on the goals or objectives set by the company. Each organization needs to plan what method will reflect the best of it and if this method will be useful for decision making and to get good result for everyone.

Topic 1: Ethics and budgeting

Budgeting is generally regarded as an essential technique for planning and controlling an organization’s activities. However, budgeting systems can also create incentives for unethical behavior.
Using examples to illustrate your discussion, explain:

How the use of budgets in planning and controlling an organization’s activities may create incentives for unethical behavior.

First of all it is important to have a definition of what Budget mean. “Budgeting is the process of allocating a company's financial resources”. The spending decision is an important factor in ever organization, because based on good planning strategies the company can improve or the opposite result. Budgeting is also about the way to make choices with the aim to improve the financial result of the company and it will help to make the business more attractive for new investor or others. (Gartenstein)

Companies usually use a budgeting system with the aim to planning how to help to the business to grow and to make sure that its development is the appropriate, especially if companies have fixed a period of time. This planning also depends on the nature of the company and based on that decisions can be made.
In addition to this, budgeting systems also help to managers and other executive personnel to manage their cost and keep them control. Budgeting systems require constantly communication to the managers and the others in the company due to they need to have a plan according to the objectives of the company. Managers also need to be aware of their budget in each company department, this is with the aim to make an appropriate allocation of all resources and make sure that hose are being used efficiently. However, a budget system is important for the companies, this does not mean that companies do not need to be a risk taker, but it will be useful for the elimination of possible mistakes made through the normal activities of the company.

Benefits of Budgeting

Even though budgets are important for each organization because there are useful for the decision making and for planning strategies for the future, those ones do not guarantee the company success but they can be useful to control and to avoid future breakdown. It is also important to remember that big organizations are composed of many people and parts in which everything needs to work together and it need to be orientated to achieve their goals and objectives. “The budget is the tool that communicates the