The Museum of New Art traditionally offers a new exhibit each month, in addition to its permanent collection. Mary Moser, the new museum director, has found that the number of exhibits must be reduced because of financial constraints. The museum has always used a line-item budget, but Mary has asked for a program budget for each of the proposed exhibits for the coming year. Explain the difference between the line-item and program budget and why Mary wants the latter.
In the past year, a major factory closed in Parsons City. Following the closure, a number of residents moved from the town. Property values are falling and the mayor believes that a tax cut is necessary to avoid further exodus. He believes that the high unemployment rate will result in a substantially increased demand for some public services. On the other hand, the declining population may reduce demand for other services. What budget approach would make the most sense for the city for the coming year? Why?
What are several reasons that a financial manager says, “It depends,” rather than directly answering a question about how much something costs?