ACCA Applied Knowledge · Management Accounting · Budget preparation
A department manager is given a budget target that she regards as impossible to achieve, and she has had no involvement in setting it. Which behavioural outcome is most likely?
Reduced motivation and possible disregard of the budget is most likely. When managers see targets as unachievable and have no say in setting them, they lack commitment, so the budget stops working as a motivational and control tool.
- AIncreased motivation because the target is stretching
- BReduced motivation and possible disregard of the budgetCorrect
- CImproved goal congruence across the organisation
- DElimination of budgetary slack
Explanation
Targets seen as unattainable and imposed without participation typically demotivate managers, who may then ignore the budget. Slack is more likely to be built in under participation, and congruence is unlikely to improve.
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