2. COST ACCOUNTING CONCEPTS FOR IS ORGANIZATIONS › 2.2 Budgeting Concepts › 2.2.2 Budget Detail, How Much is Enough?

2.2.2 Budget Detail, How Much is Enough?

Some organizations feel they can plan adequately on the basis
of an individual IS user's total budget.  These organizations
typically set objectives to limit budget growth or to reduce
expenditures on an across-the-board, fixed percentage, basis.
However, there is a groundswell of functional business
managers who are demanding that budget projections be broken
down by user, application, and specific resource category.
These managers feel they need detailed unit costs upon which
to base their budget decisions.

CA MICS Accounting and Chargeback supports budget information
at three levels of detail:  Cost Center, Invoice Category,
and Computation Code.  All budget entries apply to a
particular cost center value, however invoice category and
computation code budgets allow further detail within a cost
center level.  Budget data can be entered at any or all of
the three levels, however, all budget data will be summarized
to the cost center level being reported upon by the invoice
and other standard reports.  Computation code budgets can be
entered in resource units (for example, print lines) as well
as in money amounts.

The degree of flexibility provided by CA MICS Accounting and
Chargeback to classify data elements (cost centers, invoice
categories, and computation codes) precludes identifying
definite budgeting levels and strategies.  However, some
scenarios can be suggested.

In general, budgeting at more than one cost center level
helps to increase management control of utilization by
providing objectives for the managers who directly supervise
the work which is responsible for the charges.  This control
can be further increased if an installation utilizes some
levels of the cost center structure to identify
non-organizational groupings such as application system, test
or production status, etc.  The purpose of such
classifications is to provide more detail about IS
consumption within organizational units with diverse IS
usage.

Similarly, budgets at the invoice category or computation
code level can serve to identify specific resources which are
being used to excess.  This can be extremely helpful in
identifying the causes of a total budget overage.