Question

Self-imposed budgets typically are: a. Not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing. b. Subject to review by higher levels of management in order to prevent the budgets from becoming too loose. c. Not subject to review by higher levels of management except in specific cases where the input of higher management is required. d. Not critical to the success of a budgeting program.

Answer 1

Answer:

B. Subject to review by higher levels of management in order to prevent the budgets from becoming too loose.

Explanation:

Self budgeting is explained to be a process under which people impacted by a budget are actively involved in the budget creation process. This bottom up approach to budgeting tends to create budgets that are more achievable than are top down budgets that are imposed on a company by senior management, with much less employee participation. It is also better for morale, and tends to result in greater efforts by employees to achieve what they predicted in the budget.

However, a purely participative budget does not take high-level strategic considerations into account, so management needs to provide employees with guidelines regarding the overall direction of the company and how their individual departments fit into it.