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?