s. company a large multinational firm with several plants in each division , uses a comprehensive budgeting system for planning operation and measuring performance.The annual budgeting procces begins in August. five months prior to the begenning of the fiscal year.At this time , the divisional managers submit proposed budgets for sales, production and inventory.levels,& expenses. Capital expenditure request also are formalised at this time. he expense budget include direct labour and all factory overheads items, separated into fixed and variable componets.Direct materials are budgeted seperatly in developing the production and inventory schedules.The expense budgets for each division are developed from each plants results, as measured by the % variation from an adjusted budget in the first six months of the currrent year and at arget expense reduction % established by the corporation to determine plant % the plant budget for just completed half year period is revised to recognise changes in operating procedures and cost outsid the control of management(eg labour wage rate changes & product sytle changes).The difference between the revised budget and thee actual expenses is controllable variance , expressed as a % of the actual expenses if un favourable , this expense is added to the corperate target expense reduction %.A favourable plant variance % is subtracted from the corperate target. if a plant had 2% unfavourable contrallable variance the corporate target reduction was 4% , the plants budget for next year should reflect cost proxmately 6% below this year actual cost . Next years final budget for the corporation , its division , and plants are adpoted after coporate analysis of the proposed budgets and a carefull review with each division manager will be changes made by corporate management.Division profits budgets include allocated corporate cost & plant cost budgets include allocated divison and coporate cost.

Required evaluate the budget procedure of s company with respect to its effectiveness for planing and controlling operations 50marks