Chapter 9 - employees from other areas within the company...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
John Rubinetti AC 12 3/10/08 Chapter 9, Questions 2,7,8 2. There are six benefits to budgeting; - First it requires all levels of management to plan ahead and formalize goals. - It provides definite objectives for evaluating performance at each level of responsibility. - It creates an early warning system for potential problems, so that management can make changes before things get out of hand. - It organizes the coordination of activities within the business by correlating the goals of each segment with overall company objectives. - It results in greater management awareness of the entity’s overall operations and the impact of external factors such as economic trends. - It motivates personnel throughout the organization to meet planned objectives. 7. Participative budgeting is a process that involves the use of a bottom-to-top approach. This requires input from lower level management during the budgeting process to involve
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: employees from other areas within the company. Potential benefits of this approach are that lower level managers provide better budgetary estimates by having more detailed knowledge of the specifics of their job. Also by involving lower level managers in the process, it is more likely that they will perceive the budget as being fair and reasonable. One disadvantage of participative budgeting is that it takes more time, thus costing more. Another disadvantage of participative budgeting is that it may allow managers to abuse the process through budgetary slack. 8. Budgetary slack is the amount by which a manager intentionally underestimates budgeted revenues or overestimates budgeted expenses in order to make it easier to achieve budgetary goals. Managers may have an incentive to create budgetary slack in order to increase the likelihood of receiving a bonus, or decrease the likelihood of losing their job....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern