ACCA Applied Knowledge · Management Accounting · Behavioural aspects of budgeting
Which of the following is a likely behavioural problem when a manager's budget is imposed by senior management with no consultation?
The likely problem is reduced acceptance of targets and demotivation. When managers have no say, they feel little ownership of the budget and may resent it. Greater commitment and use of local knowledge are benefits of participative rather than imposed budgeting.
- AIncreased commitment to achieving the budget
- BReduced acceptance of the targets and possible demotivationCorrect
- CGreater creation of budgetary slack
- DBetter use of local knowledge in forecasting
Explanation
Imposed budgets lack manager buy-in, so targets may be resented and rejected, leading to demotivation. Commitment and use of local knowledge are benefits of participation. Slack is typically linked to participative budgeting where managers have influence over the figures.
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