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Riorden Manufacturing Budget Money Management Is An Essay

Riorden Manufacturing Budget Money management is an important skill for managers. No company, and thus no manager, has access to infinite amounts of money, so it is critical that a manager learn to review budgets, to account for increases in costs, and to determine how to trim a budget if the situation requires it. The Riorden Manufacturing IT Manager oversees a budget of under 2 million dollars, and must be capable of balancing the budget, which means balancing the requirements of running a capable IT department with the actual amount of money he has been given to run his department. His original budget included costs totaling $1,901,300 for the financial year, which runs from October through September. He has been tasked with decreasing the total budget from the expected level by 2%, to meet a total budget of $1,863,274 or less.

In the same financial period, Riorden Manufacturing has been forced to increase costs for hardware, software, and outside IT support, which fall into the budget categories of Contracts, Hardware, and Software Licenses, by 4% in the most recent iteration of his annual budget. Should his other costs remain unchanged, he would require $1,905,048 to fully fund his department's operations for the year. Given the rising costs, the IT Manager must now seek to cut at least $41,774 from his budget for the 2004 financial year.

Table 1: Rioden Manufacturing Revised Budget

Item

Original Total

Cost Increase

New Total

Reduction ($)

Final Total

% Overall Reduction

Compensation

Wages & Salaries

1,111,992.00

1,111,992.00

1,111,992.00

Benefits

255,758.16

255,758.16

255,758.16

Bonuses

200,000.00

200,000.00

20,000.00

180,000.00

10.0%

Total

1,567,750.16

1,567,750.16

20,000.00

1,547,750.16

1.3%

Other Expenses

Conferences

3,750.00

3,750.00

1,000.00

2,750.00

26.7%

Contracts (1)

43,200.00

1,728.00

44,928.00

44,928.00

Hardware (2)

8,500.00

8,840.00

8,840.00

Leased Lines

50,400.00

50,400.00

50,400.00

Maintenance

The manager's has a duty to his company to provide excellent IT service while simultaneously having a duty to his personnel to maintain a reasonable working climate.
The first cut the IT manager should make is to the budget for conferences. IT professionals use conference attendance to keep up with new developments in their industry, social networking opportunities, and to visit interesting places (Schenberg, 2008, para 1). Keeping up with new developments is the most important aspect of conference attendance, as it is most likely to directly benefit Riorden Manufacturing. However, in the case of budget cuts, it is prudent of the IT Manager to reduce the number of conferences to be attended, or reduce the number of personnel who can attend them. IT personnel can keep up with new developments in their industry online or through training. In the new budget, the budget for conferences is cut from $3,750 to $2,750, a 26.7% reduction.

Next, the IT Manager can make cuts to the budgets for entertainment and travel expenses. Travel is one area where it may be difficult to make cuts in the near future, since the cost of airline flights is expected to…

Sources used in this document:
Work Cited

Business Research Lab. (2007.) "Employee Recognition Programs." Retrieved from http://www.busreslab.com/policies/goodpol4.htm

Consumer Traveler. (May 4, 2011.) "Bing Travel Summer Forecast: Airfares Rise nearly 15%, Hotels Up 7%." Retrieved from http://www.consumertraveler.com/today/bing-travel-summer-forecast-airfares-rise-nearly-15-percent-hotels-up-7-percent/

Kawaguchi, Daiji and Ohtake, Fumio (2007.) "Testing the Morale Theory of Nominal Wage Rigidity," Industrial & Labor Relations Review, Vol. 61, No. 1, article 3. Retrieved from http://digitalcommons.ilr.cornell.edu/ilrreview/vol61/iss1/3

Schenberg, David. (December 1, 2008.) "Why do people go to conferences?" BusyEvent Blog. Retrieved from http://www.busyevent.com/blog/?p=58
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