To budget machinery raises many difficult problems. The first problem is to determine the period which the budget should cover. In budgeting the sales and production of a business, the fiscal period, usually a year, is the basis followed. A monthly detailed budget supplements the annual budget. There are several reasons for using the year as the basis for budgeting sales. First, it is the period covered by the profit and loss statement. Second, the year is a comprehensive enough period to include all the seasonal changes, and thus the relation between seasons may be determined. Third, the yearly budget provides a basis by which comparisons of similar periods in different years, or full years may be fairly made. These reason also hold good for the budgeting of production on a yearly basis, productivity depending on the same seasons fluctuation as do sales. In budgeting machinery, however, the fiscal year may not be the logical period. There is no relation between the fiscal year and machinery production.

This article focuses on the budget program instituted by the production department. The chief problem will be to produce the goods in time for their sale. In order that this may be done, or that production and sales demand may be coordinated, an inventory record of the finished goods must be kept. These records will include a control over the minimum and maximum amounts of inventory which should be on hand. The production department may consider it best to follow the lead of the sales department by manufacturing the product for the seasonal demand and shutting down until production again becomes necessary. This is the practice in many industries. In the first place, the practice of working at a high pitch for a few months of the year is not the best way of using plant and machinery. Second, it is often more economical to buy raw materials when the season is over and the demand less. Third, it is well known that men do better work when operations are regular than when they are forced to turn out rush orders.

For years the system of setting up a budget at the beginning of the fiscal period has been urged upon business conceits, as of September 1929. For a long time the advantages of the budget have been explained to all those who showed the least interest in the subject. Business men were told that the budget system would render a great service to the business in the fact that budgeting requires planning ahead. They were also told that the budget is the best help in coordinating all the activities of the various departments and the budget can be used as a means for centralized executive control. But in spite of all these arguments in its favor, the budget has never appealed strongly to the business executive. After a few years of experimentation with it, they came to the conclusion that it was not worth the money and the effort spent on it. Budgeting, these businessmen claimed, was nothing but guesswork. In addition these business men claim that the budget is after all no help to management as an instrument of control. For everyone in the concern very likely knows that the budget was a compilation of guesses and therefore could not be used as a standard.

It was in the main due to an accident that the efficiency idea was taken over by the engineering fraternity. The accountants, had they interested themselves in that direction, would have made better efficiency experts than the engineers, for they are by education and training better fitted for efficiency work. In the first place the accountant has a better grasp of business and economics subjects because of his education than has the engineer. Second, the accountant, coming constantly into contact with business men, has a better understanding of human relationships. He can deal better with people, whereas the nature of the engineer's work enables the latter to deal best with machinery and construction problems. An excellent judge of problems connected with bridges, roads, etc., he is more or less at a loss when confronted with problems involving human relationships. The efficiency engineer has tried to handle the workman as though he were a machine. The accountant on the other hand, accustomed as he has to deal tactfully with people, would never have antagonized labor against the whole efficiency movement as has the engineer.