Fundamentals of Management 7th Edition by Ricky Griffin

Exercise 23

Exercise Overview
Technical skills are necessary to understand or perform the specific kind of work that an organization does. This exercise allows you to develop the technical skills needed to construct and evaluate the effectiveness of a budget.
Exercise Background
Although corporate budgets are obviously much more complicated, the basic processes of creating a corporate budget on the one hand and a personal budget on the other share a few important features. Both, for instance, begin with estimations of inflow and outflow. In addition, both compare actual results with estimated results, and both culminate in plans for corrective action.
Exercise Task
Prepare lists of your estimated expenditures and income for one month. Remember: You're dealing with budgeted amounts, not the amounts that you actually spend and take in. You're also dealing with figures that represent a typical month or a reasonable minimum. If, for example, you estimate that you spend $200 a month on groceries, you need to ask yourself whether that's a reasonable amount to spend on groceries for a month. If it's not, perhaps a more typical or reasonable figure is, say, $125. First, estimate your necessary monthly expenses for tuition, rent, car payments, childcare, food, utilities, and so on. Then estimate your income from all sources, such as wages, allowance, loans, and funds borrowed on credit cards. Calculate both totals.