The budgeting process may be approached differently in variousfirms. Top-down budgeting has its inception with directives fromsenior management who prepare the budget for staff and assessperformance based on objectives established at higher levels. Anyadditional compensation received occurs as a result of achievingbudgetary targets imposed by others. In contrast, bottom-upbudgeting reflects the predictions of cost, revenue, profit, andinvestment center managersâproposed and approved by seniormanagers. Incentives are negotiated by managers proposing thebudget rather than imposed by higher level executives.
Answer the following question:
1. Should managers be commended for achieving favorable overheadspending, efficiency, and production volume variances? Rationalizeyour response.
The budgeting process may be approached differently in variousfirms. Top-down budgeting has its inception with directives fromsenior management who prepare the budget for staff and assessperformance based on objectives established at higher levels. Anyadditional compensation received occurs as a result of achievingbudgetary targets imposed by others. In contrast, bottom-upbudgeting reflects the predictions of cost, revenue, profit, andinvestment center managersâproposed and approved by seniormanagers. Incentives are negotiated by managers proposing thebudget rather than imposed by higher level executives.
Answer the following question:
1. Should managers be commended for achieving favorable overheadspending, efficiency, and production volume variances? Rationalizeyour response.
