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Read the following scenario: Pretorious Manufacturing has just
hired a new controller, Diana Metcalf. During her first week on
the job, Diana was asked to establish a budget for operating
expenses in 2014. Since Diana was not yet familiar with the
operations of Pretorious Manufacturing, she decided to budget
these expenses using the same procedures as the prior
controller. Therefore, in order to establish a budget for
operating expenses, Diana started with actual operating
expenses incurred in 2013 and added 4.3 percent. Diana based
this
percentage on inflation as measured by the consumer price
index. ○ Comment on the effectiveness of Diana’s budgeting
strategy. Be sure to use concepts and principles from the text
250 words

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Read the following scenario Pretorious Manufacturing has just hired.docx

  • 1. Read the following scenario: Pretorious Manufacturing has just hired a new controller, Diana Metcalf. During her first week on the job, Diana was asked to establish a budget for operating expenses in 2014. Since Diana was not yet familiar with the operations of Pretorious Manufacturing, she decided to budget these expenses using the same procedures as the prior controller. Therefore, in order to establish a budget for operating expenses, Diana started with actual operating expenses incurred in 2013 and added 4.3 percent. Diana based this percentage on inflation as measured by the consumer price index. ○ Comment on the effectiveness of Diana’s budgeting strategy. Be sure to use concepts and principles from the text 250 words