Capital Budgeting Problems Article Example | Topics and Well Written Essays - 2500 words

Capital Budgeting Problems - Article ExampleRather than that it is easier to the investment. This is repayable to the difficulty the future organization face in calculating the future benefits most organizations normally do not undertake new investments.These judgements can be undertaken if the assets be quantifiable. The benefits attached to the intangibles can only be judged by the educated senior executive of the organizations and investments in such projects can be made on the basis of the beliefs of the organizations heads. The investments in these projects should be formally budgeted on the other hand it is strongly recommended to undertake biennial reviews of the outcomes and benefits attached to these projects. With investment in value delivering projects it is too important to invest in organizational skills and arranging since they affect the value.Activity Based costing system is used to achieve the organisations objectives by supporting decision-makers inwardly the enterprise. Internal decision-makers are employed by the enterprise. These internal decision-makers create and use internal accounting information in order to undertake cost cutting and enhance the business profits (Meigs, Williams, Haka & Bettner, 1999).The development of potent management accounting systems although has played an important part in dealing with the problems discussed above but also it has given rise to the problems of downsizing and cost cutting. There are several factors, which were identified to relieve oneself ascertain on the structure of these systems. These include differentiation degree of integration (internal & external) and the configuration of the organisations. Some researchers reveal contextual relationship between the above mentioned factors the management accounting system and information systems. (Daft and Mac intosh 1978 Khandwaila, 1972) Although many theories have been put forward in order to find out the efficient allocation of resources of t he organizations but severally of them has different drawbacks attached to them. Open theories Open theories address all the social, psychological and structural factors. According to the rough theories organisations are the organisms which take inputs from the environment and give outputs. Open systems undertake the analysis of all the different disciplines and levels. The discourteous theories address all the aspects such as political social and technological extending its scope from other theories, which are confined only at studying the economic consequences.Cybernetics covers the techniques applications. The cybernetics theories contend goal oriented behaviour and emphasise the change of role of individuals according to the situation. The main drawback of the theory is that it doesnt give up a universal solution and fails to provide specified guidelines for the individuals about their behaviour in different scenarios. (Aney, 1980)Social