The Theatre Budget
GELT needs to …show more content…
By contrast, the budgeting phase typically has a one-year focus and is concerned with only operating activities. The end results usually are an operating budget and a cash budget. (Young, D., p.137).
The initial budget from Dobbs followed the revenue-first policy which means that those responsible for budgeting first decide on what the organization will have in terms of resources (revenue), and then decide on how it will be spent. The text states:
The general purpose of a non-profit organization is to provide as much services as it can with available resources...The goal in preparing an operating budget, therefore, is to decide how best to spend it. This suggests that the basic approach should be to first estimate the available resources. Most managers would agree that the policy of anticipating revenues first, and then budgeting expenses below or equal to them, is fiscally sound. (Young, D., p.168)
The GELT Board expressed their displeasure about the fact that in Dobbs’ proposed budget revenue was less than the year before even though their previous year’s actual revenue was $15,000 less their anticipated revenue and their expenditures were more than their revenue. Dobbs reduced expenditures to reflect realistic projected revenues. There are exceptions to the revenue-first policy; the exceptions that would relate to this case include discretionary