SRS Educational Supply Company: An Instructional Budget Project

Abstract

ABSTRACT This project provides students with an opportunity to develop a master budget for a merchandiser. Students work in a team environment that also helps them discover budget process issues. The project consists of two parts. The first part requires students to grasp the mechanics of master budget creation and develop an understanding of how the individual budgets fit together and how information flows from one budget to other budgets. The second part of the project requires students to create new budget information when given a different organizational structure and incentive system. Both parts of the project expose students to budget process issues related to communication, cooperation, public/private information, information sharing, truth telling, and the influence of incentives on the budget process. The project is directed at undergraduate students in Managerial or Cost Accounting courses. We also present modifications that emphasize the budget process issues that would be useful for a graduate-level managerial accounting course (Master's in Management or M.B.A.).