Page 880 - Accounting Principles (A Business Perspective)

This book is licensed under a Creative Commons Attribution 3.0 License

23. Budgeting for planning

and control

A manager's perspective
Jim Wardlaw
Regional Vice President and General Manager
Atlanta Region
The Coca-Cola Company
I began my career with The Coca-Cola Company as an account manager supplying product to local stores and
restaurants in my territory. I then spent some time as Area Marketing Manager and Area Sales Development

Manager before reaching my current position.
As Regional Vice President and General Manager, I oversee the administration and operations of a region
spanning 150,000 square miles, and one of my primary objectives is to maintain a successful return on investment.
I manage three division vice presidents and four regional vice presidents, and I try to spend about 60 percent of my
time working with account managers who call on retail trade accounts.
In fact, a lot of my job is providing training and inspiration. We hold monthly meetings with each division to
assess sales and provide motivation for the account managers. I also monitor daily key indicator reports to track

sales performance in the region.
Behind increasing sales, a strong emphasis on training is one of my most important objectives. For example,
Coca-Cola recently instituted a six-week training program for new account managers. The program brings new
members of the sales team up to speed on the company and sales techniques, then puts them out in the field. Our
sales base is constantly expanding, and we are starting to call on different buyers, so we need ongoing training to
stay competitive.
All of this training helps the region achieve its number one objective—increasing sales and making the "bottom
line". Sales for each division are closely monitored, and we measure employees' performances against the sales
budget established for the region.

In managing your personal finances, you may prepare a written plan of your anticipated cash inflows and
outflows. In fact, financial advisors often recommend that we prepare a written plan of cash inflows and outflows,
then—here is the hard part—follow it. Such a written plan is a budget.
Companies prepare budgets to plan for and then control their revenues (inflows) and expenses (outflows).
Failure to prepare a budget could lead to significant cash flow problems or even financial disaster for a company. In
fact, one of the leading causes of failure in small businesses is failing to plan and control operations through the use
of budgets.

This chapter first provides a conceptual foundation for budgeting. Then we describe and illustrate a master
budget. The chapter concludes with special topics relating to budgeting.

Accounting Principles: A Business Perspective 881 A Global Text