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In: Finance

Contrast the disadvantages of top-down budgeting and bottom-up budgeting. Please make response 200-500 words

Contrast the disadvantages of top-down budgeting and bottom-up budgeting. Please make response 200-500 words

Solutions

Expert Solution

top down budgeting approach will be focused at high concentration of decision-making at the top by the senior management of the company and they will be engaged with making majority of the decision related to the long-term planning and performance of the company.

disadvantages related to top-down budgeting will be that since the managers are not associated with day-to-day business of the company then managers will not be focusing upon the success of the decisions. top-down budgeting can also lead to underestimation and overestimation of allocation of the resources because top level management is not associated with the day-to-day management of the company. Another disadvantage related toTop down budgeting approach age setting of the unrealistic targets which is not achievable by the company and these unrealistic target are also demotivating for employees.

Disadvantages of bottom up budgeting

A. responsibilities fixation of difficult because there will be a large number of persons involved in the decision making

B. This can lead to a scattering in decision-making as there will be lot of persons who are actively participating in decision making

C. Bottom up budgeting are also highly expensive

D. There are preparation delays associated with bottom up budgetingbudgeting


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