Budgeting Paper 3

1

The primary role of the budget director and the budgeting department is to






2

Which one of the following is not considered to be a benefit of participative budgeting?






3

The budgeting technique that is most likely to motivate managers is






4

Which one of the following is most important to a successful budgeting effort?






5

The major disadvantage of a budget produced by means of a top-down process is






6

All of the following are criticisms of the traditional budgeting process except that it






7

The following sequence of steps is employed by a company to develop its annual profit plan:
? Planning guidelines are disseminated downward by top management after receiving input from all levels of management.
? A sales budget is prepared by individual sales units reflecting the sales targets of the various segments. This provides the basis for departmental production budgets and other related components by the various operating units. Communication is primarily lateral with some upward communication possible.
? A profit plan is submitted to top management for coordination and review. Top management’s recommendations and revisions are acted upon by middle management. A revised profit plan is resubmitted for further review to top management.
? Top management grants final approval and distributes the formal plan downward to the various operating units.
This outline of steps best describes which one of the following approaches to budget development?






8

All of the following are advantages of top-down budgeting as opposed to participatory budgeting, except that it






9

Marietta Thomas, Amador Corporation’s vice president of planning, has seen and heard it all. She has told the corporate controller that she is “....very upset with the degree of slack that veteran managers use when preparing their budgets.” Thomas has considered implementing some of the following activities during the budgeting process.
1. Develop the budgets by top management and issue them to lower-level operating units.
2. Study the actual revenues and expenses of previous periods in detail.
3. Have the budgets developed by operating units and accept them as submitted by a company-wide budget committee.
4. Share the budgets with all employees as a means to reach company goals and objectives.
5. Use an iterative budgeting process that has several “rounds” of changes initiated by operating units and/or senior managers.
Which one of these activities should Amador implement in order to best remedy Thomas’ concerns, help eliminate the problems experienced by Amador, and motivate personnel?






10

Budgeting problems where departmental managers are repeatedly achieving easy goals or failing to achieve demanding goals can be best minimized by establishing






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