Advantage And disadvantage of budget slack

Advantage And disadvantage of budget slack - A dvantage and...

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Advantage and disadvantage of budget slack Advantages -It provides flexibility for operating under unknown circumstances, such as an extra margin for discretionary expenses in case budget assumptions on inflation are incorrect, or adverse circumstances arise. -Additional slack may be included to offset the costly setups from design changes (depends on situation) -the increase in budget costs may shift expenditures to next year Disadvantages -It decreases the ability to highlight weaknesses and take timely corrective actions on problem areas. -It decreases the overall effectiveness of corporate planning. Unnecessary actions such as pricing changes or reduces promotional spending may be taken from a perceived need to improve earning, when eliminating the budgetary slack could accomplish the same objective without marketplace changes. -It limits the objective evaluation of department’s managers and performance of subordinates by using budgetary information. Zero-based budgeting advantages
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This note was uploaded on 08/16/2011 for the course MGMT 301 taught by Professor Hisham during the Spring '11 term at McMaster University.

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Advantage And disadvantage of budget slack - A dvantage and...

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