Budgeting System

MEDTECH's Sales Director wishes to introduce responsible accounting and

budgeting to each of the key account managers. Historically, sales staff never did

comprehensive budgeting as MEDTECH is a resale-based company as opposed to,

for example, a typical production-based company. Account managers only set sales

targets. The Sales Director plans to make each key accounts manage a profit centre.

Not only will sales targets be set, but comprehensive cost budgeting must be done

with all sales teams to quantify how the sales targets will be achieved. This will allow

key account managers to do a customer profitability analysis on budgeted and actual

Question

In the context of MEDTECH,

1 Discuss how a budget can cause conflict between "motivation" and "control".

2 Discuss different circumstances where participation in setting budgets is likely to contribute to poor performance from managers.