Advantages-disadvantages-imposed budgets, Managerial Accounting

Advantages of Imposed budgets

Advantages:

They increase the probability that the organization strategic plans are incorporated into the planned activities.

  • They enhance the co-ordination between the plans and objectives of divisions.
  • They use senior management consciousness of net resource availability.
  • They decrease the possibility of inputs from inexperience or uniformed lower level employees.
  • They reduce the period of time taken to draw up the budget.


Disadvantages of Imposed budgets:

  • It may result in dissatisfaction, defensiveness and low morale among employees, who must implement the budget.
  • The feeling of team spirit might vanish.
  • The acceptance of organizations goals and objectives could be limited.
  • The sense of the budget as a punitive tool could arise.
  • Unachievable budget for overseas divisions may be imposed on local divisions if consideration is not given to the local operating and political environment.

 

Posted Date: 12/7/2012 8:03:14 AM | Location : United States







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