ACCA Applied Knowledge · Management Accounting · Behavioural aspects of budgeting
A manager is allowed to help prepare the budget for her own department, and the final figures reflect her input. Which budgeting approach is this?
This is participative budgeting. Managers who will be held responsible for the budget take part in setting it, so their input is reflected in the final figures. Imposed budgeting is different because senior management sets the targets without consulting the managers concerned.
- AParticipative budgetingCorrect
- BImposed budgeting
- CIncremental budgeting
- DZero-based budgeting
Explanation
In participative (bottom-up) budgeting, the managers who will be responsible for the budget help to set it. Imposed budgeting is the opposite, since senior management sets targets without input. Incremental and zero-based describe how figures are built, not who sets them.
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