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Budgeting methods analyzed

Discuss what your reaction(s) might be to the top-down budgeting technique.

Compare and contrast your reaction(s) to top-down budgeting with what your reaction(s) might be to budgets prepared according to the steps: (Carefully consider your response(s).

(1) dissemination of guidelines stating the overall plans and policies and other assumptions and constraints that are to be observed in the preparation of budget estimates; (2) preparation of the sales budget; (3) preparation of other estimates by the managers of responsibility centers, assisted but not dominated by the budget staff; (4) negotiation of an agreed-on budget between subordinate and superior, which gives rise to a bilateral commitment by these parties;
(5) coordination and review as these initial plans move up the organizational chain of command; (6) approval by senior management and the board of directors; and (7) dissemination of the approved budget back down through the organization.

Recall that the budget process outlined in the text calls for negotiation and agreement between subordinates (who prepare the budgets) and superiors (who review the budgets) as well as final review and approval by senior management.

Consider how you would probably react to your superiors' or senior managements' changes in budgets that you prepared in "good faith" and using full informationÃ?¢?"that is, budgets that you believe reflect underlying economics and that are free of personal bias. Would you feel that it would be "fair" or "logical" to change your carefully prepared budgets (on which you expended considerable time and effort) on some basis other than the economic conditions present in your responsibility area?"

Considering that under top-down budgeting you would have no budget preparation time and effort, would your reaction(s) to budget changes be "better" or "worse" than if management simply informed you of your expected performance measures using top-down budgeting?

Solution Preview

First let me give you a suggested Outline for handling such a question

1. Define budgeting
2. Discuss Top Down Budgeting
3. Discuss the advantages and disadvantages of Top Down Budgeting
4. Discuss an Integrative Approach to budgeting
5. Discuss the Advantages and disadvantages of the integrative approach
6. Conclusion.

As you know, I cannot give you everything. I can only guide you.

Definition of Budgeting - I will leave this up to you.

Top Down Budgeting
Top-down budgets are prepared by top ...

Solution Summary

Discuss what your reaction(s) might be to the top-down budgeting technique.

Compare and contrast your reaction(s) to top-down budgeting with what your reaction(s) might be to budgets prepared according to the steps: (Carefully consider your response(s).

(1) dissemination of guidelines stating the overall plans and policies and other assumptions and constraints that are to be observed in the preparation of budget estimates; (2) preparation of the sales budget; (3) preparation of other estimates by the managers of responsibility centers, assisted but not dominated by the budget staff; (4) negotiation of an agreed-on budget between subordinate and superior, which gives rise to a bilateral commitment by these parties;
(5) coordination and review as these initial plans move up the organizational chain of command; (6) approval by senior management and the board of directors; and (7) dissemination of the approved budget back down through the organization.

Recall that the budget process outlined in the text calls for negotiation and agreement between subordinates (who prepare the budgets) and superiors (who review the budgets) as well as final review and approval by senior management.

Consider how you would probably react to your superiors' or senior managements' changes in budgets that you prepared in "good faith" and using full information?"that is, budgets that you believe reflect underlying economics and that are free of personal bias. Would you feel that it would be "fair" or "logical" to change your carefully prepared budgets (on which you expended considerable time and effort) on some basis other than the economic conditions present in your responsibility area?"

Considering that under top-down budgeting you would have no budget preparation time and effort, would your reaction(s) to budget changes be "better" or "worse" than if management simply informed you of your expected performance measures using top-down budgeting?

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