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1. Introduction
Piele SA started a budget committee consisting of the chief accountant, a cost accountant, a technical director, and heads of the production departments. The committee was formed to help develop a budget using the zero-based budgeting system. Piele SA’s budget was based on the expected level of activity in sales that the firm expected to generate during the year. Piele SA started its budget from zero, and continued to re-evaluate and adjust targets throughout the operating year; an example of this is shown in the adjusted columns in Exhibits 6 to 9. By using zero-based budgeting, Piele SA was forced to examine operations and expenses in order to plan and forecast for the upcoming year.

Piele SA used sales as the main driver behind its budget. By having accurate forecasted sales, Piele SA would have a solid foundation for all other budgets, including Direct and Indirect Cost of Goods Sold, Administrative, and Commercial categories. Sales did not achieve......

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Approximate Word Count: 2368
Approximate Pages: 10 (250 words per double-spaced page)

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