LET’S ANALYZE ULOB
1. Explain the importance of human aspect in budgeting and responsibility accounting.
The human aspect of budgeting refers to the human factors that are regarded as vital part
of budgeting. These human aspects are important since the administration of budgeting requires
education, persuasion, and intelligent and interpretation. A successful budgeting brings together
the three major pillars: people, data, and process. Furthermore, to ensure the success of
responsibility accounting, it is important to look into the human aspect also by considering the
needs of subordinates, providing information about control measures and adjusting according to
requirements, and develop mutual interest. Therefore, human aspect is important in budgeting
and responsibility accounting because human factors are crucial in both aspects.
2. Explain the relationship between responsibility accounting and budgeting in performance
management?
A responsibility accounting provides information to evaluate each manager on the
revenue and expense items over which that manager has primary control. It is fundamental to
control because it involves the managers accountable for the performance of their respective
units. It is closely associated with budgeting because budgeting involves the allocating of
resources to an organization. Also, budgeting highlights benchmarks that are used when
appraising a unit managers performance. Thus, budgets coupled with responsibility accounting
provide feedback to top management about the performance relative to the budget of different
responsibility center managers. Organizational control is the underlying theme of responsibility
accounting and budgeting.