ACTG2020_Week8 Ch9_2014

Participation lo 1 advantages of participative

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Unformatted text preview: Participative Budgets 1. 1. IIndividuals at all levels of the organization are viewed Individuals at all levels of the organization are viewed ndividuals Individuals as members of the team whose judgments are valued as members of the team whose judgments are valued members members by top management. by top management. by by 2. 2. Budget estimates prepared by front-line managers are Budget estimates prepared by front-line managers are Budget Budget often more accurate tthan estimates prepared by top often more accurate han estimates prepared by top more more managers. managers. managers. managers. 3. 3. Motivation is generally higher when individuals Motivation is generally higher when individuals participate in setting their own goals than when the participate in setting their own goals than when the goals are imposed from above. goals are imposed from above. goals goals 4. 4. A manager who is not able to meet a budget imposed A manager who is not able to meet a budget imposed manager manager ffrom above can claim that it was unrealistic.. rom above can claim that it was unrealistic unrealistic unrealistic Participative budgets eliminate this excuse. Participative budgets eliminate this excuse. Participative Participative LO 1 Participative (Self-Imposed) Budgets Participative (self-imposed) budgets should be Participative reviewed by higher levels of management to prevent “budgetary slack.” prevent Most companies do not rely exclusively upon Most participative budgets in the sense that top managers usually initiate the budget process by issuing broad guidelines in terms of overall profits or sales. profits LO 1 Zero-Based Budgeting A zero-based budget requires managers to justify all budgeted expenditures, not just changes in the budget from the prior year. Most managers argue that Most managers argue that zero-based budgeting is too zero-based budgeting is too ttime consuming and costly to ime consuming and costly to jjustify on an annual basis. ustify on an annual basis. LO 1 Budgeting E...
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This note was uploaded on 03/28/2014 for the course ACTG 2020 taught by Professor Lizfarrel during the Spring '11 term at York University.

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