Methods of setting budgets Megan Espanoza, manager of the Wells Division of Mars, Inc., a large credit card company, recently received a memorandum about the proposed budgeting process for 2000. For the coming year, senior management at Mars would follow a new procedure regarding the budget-set- ting process. The process would work in the following manner. Megan and the other division managers would each submit a budget proposal outlining their operating plans and financial requirements. Management would then study the proposals and determine the budget for each division.

REQUIRED

(a) What is this form of budgeting called?

(b) What are the pros and cons of this approach? Explain.

(LO 8)