What is meant by the term participative budgeting

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Assigning responsibilities in various responsibility centers.

Mr. Sparks is the CEO of a large manufacturing company. He believes strongly that he is the keeper of all the knowledge of what is best for the company. Mr. Sparks has traditionally prepared all of the budget estimates himself and then communicated the results to his department managers. In the past several years, however, he has begun to notice that the department managers rarely manage to stay within their budgets and have many excuses for their failures. Mr. Sparks has also noticed an increase in is employee turnover, particularly at the managerial level.

a. Explain what is meant by the term "participative budgeting" and how the term relates to the current situation.

b. How would you recommend the Mr. Sparks change the budgeting procedures to gain more support from department managers?

c. How does participative budgeting contribute to a positive budgeting culture (atmosphere)?

Reference no: EM1314708

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