Question

All the following are considered to be benefits of participative budgeting, except for:

• The budget estimates are prepared by those in directly involved in activities.

• Individuals at all organizational levels are included in the process, creating a better communication devise throughout the company.

• When managers set their own targets for the budget, top management does not need to review and oversee the targets.

• Managers are held responsible for reaching their goals and cannot easily shift responsibility by blaming unrealistic goals set by others.

AAA Company operates with fixed and variable costs and produces one product. As production increases within the relevant range

, what will happen to variable cost per unit?

• It will decrease.

• It will increase.

• It will stay the same.

• It can not be determined.

Which of the following is NOT an objective of the budgeting process?

• To motivate employees to work toward company goals.

• To communicate management's plans throughout the entire organization.

• To uncover potential bottlenecks before they occur.

• To ensure that the company meets its profit objectives.

Answer 1

Under participative budgeting, the targets are set jointly by the top management and those who are actually going to work on them

The benefits are all except

When managers set their own targets for the budget, top management does not need to review and oversee the targets

Targets need to be overseen by top management

It will stay the same.

Total fixed costs and variable cost per unit remains same within the relevant range

To uncover potential bottlenecks before they occur