Comment briefly on the following quotes about budgeting from a financial planning textbook: (a) One major criticism
Question:
Comment briefly on the following quotes about budgeting from a financial planning textbook:
(a) "One major criticism of budgeting is that it is used as a 'cost reduction' tool rather than a 'cost control' tool. The objective of the budget is to control costs at an efficient level of operation."
(b) "There are generally three benefits from allowing employees to participate in developing the budget: (1) Employees tend to accept the budget as their own plan of action. (2) Participation tends to increase morale among employees and toward management. (3) Employee cohesiveness is increased, and pro- ductivity will also increase if dictated by the group norm."
(c) "Even though budgets are quantitative tools, considerable emotion is con- nected to budgeting. The individual in control often sees the budget as a means of getting things done. People being controlled often have feelings of anxiety because their success and promotion are tied directly to the budget."
Step by Step Answer:
Managerial Accounting
ISBN: 9780538842822
9th Edition
Authors: Harold M. Sollenberger, Arnold Schneider, Lane K. Anderson