ACCA Applied Knowledge · Management Accounting · Behavioural aspects of budgeting
A manager is told that her department budget has been set by senior management without any discussion with her. Which budgeting style is being described?
This is imposed, or top-down, budgeting. Senior management sets the targets without consulting the manager responsible. Participative budgeting involves managers in setting targets, while zero-based and incremental describe how budget figures are calculated rather than who decides them.
- AParticipative budgeting
- BImposed (top-down) budgetingCorrect
- CZero-based budgeting
- DIncremental budgeting
Explanation
When budgets are set by senior management with no input from the managers who must meet them, the style is imposed or top-down. Participative budgeting would involve the manager in setting targets. Zero-based and incremental describe how figures are built, not who sets them.
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