ACCA Applied Knowledge · Management Accounting · Behavioural aspects of budgeting
Which situation would make an imposed budgeting approach more appropriate than a participative one?
Imposed budgeting is more appropriate when the business is new, managers lack budgeting experience, or time is short. Senior management can then set targets quickly and consistently. Experienced managers, a desire for motivation and a need for local knowledge all favour participative budgeting instead.
- AManagers are experienced and have detailed local knowledge
- BThe business is new or its managers lack budgeting experience and time is shortCorrect
- CSenior management wants to improve motivation
- DThe organisation operates in a rapidly changing environment needing local input
Explanation
Imposed budgets suit inexperienced managers, tight deadlines or crises, because senior management can set targets quickly and consistently. Experienced managers, motivation goals and the need for local knowledge all favour participation.
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