managerial accounting
Which of the following is a benefit of participative budgeting?
A. Budget planning is highly centralized.
B. A twelve-month planning horizon is maintained at all times.
C. Employees tend to be more motivated to achieve the budget.
D. Communication is clearer because it flows in only one direction – upward.
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Answers
C. Employees tend to be more motivated to achieve the budget. Participative budgeting involves involving employees in the budgeting process. This gives employees ownership of the budget and typically leads to increased motivation to reach the budget targets. By involving employees in the budgeting process, it also leads to better communication and a clear understanding of objectives and goals.
