Question

g Your company utilizes the "bottom up" approach to the budgeting process. From a department manager's perspective, describe in your own words what "bottom up budgeting" means (1 pt.) and two reasons why this is an effective method for the budgeting process.(2 pts.)

Answer 1

Answer: Bottom up budgeting leads to accuracy and motivation of workers.

Explanation:

Bottom-up budgeting is defined as a budgeting technique that commences at the department level and then proceed to the top level. Every department in the organization makes a list of the things needed. The list include its planned projects and cost estimates for the following financial period. The estimates derived from every department are then added together to get the company's budget.

The advantages of bottom-up budgeting are:

1. Accuracy: In bottom-up budgeting, budget estimates are calculated from the lowest to the highest level and this helps to improve the accountability and accuracy of the budget.

2. Employee motivation: Workers are challenged and motivated to work hard when they are part of the budget making process of the company. They are contented and feel they're a part of the company and hence, strive to work harder.