An investigation into the gap between budgets and experience: the case of Bamburi special products limited
Abstract
This study sought to compare the budgets and the export results in a period of four years from
1998 to 2001. An analysis of variances between capital expenditure budgets and the four year
performance budgets on one hand and the export results on the other was done. The reasons
for deviations and the remedial actions were sought.
The analysis of variances depicts a huge variation from the set targets. The performance in the
four-year shows that only a small proportion of the expected profits was attained. The highest
level of achievement accounts for only 7% of the budget. The capital expenditure was equally
below. The budgeted.
Empirical evidence suggests that most budget targets are set to be 80% to 90% achievable
(Merchant and Manzoni, 1989). This is in contrast to management accounting literature which
suggests that for optimum motivation budget targets should be achievable 50 percent of the
time. According to Marks (1966), there is. problem of planning ahead for expenditures to be
incurred in two years time.
The variances observed in this study add to the already complex challenge of dealing with the
future which is uncertain
Citation
A Management Research Project Report Submitted in Partial Fulfillment for the Requirements of the Degree of Masters of Business Administration (MBA), School Of Business, University Of NairobiPublisher
Business Administration