Question

Discuss you understanding of decentralisation.                                             2 Marks

Give one advantage of a decentralisation.                                                      2 Marks

Why is flexible budget preferred over static budget?                                    4 Marks

Answer 1

1. Decentralisation- It Refers to delefgation or distribution of the control, power ,planning/ decision making of an organization , throughout all the individuals of the organization.

This is just opposite of the centralisation where all decision making is confined at central however in decentralisation the control moves to all departments , units and individuals.

2) One of the important advange of Decentralisation is Employee motivation. Employee gets motivated as they can take the decisions of their own which makes them a sense of importance of their contribution to the company.

3. As the name suggests flexible budget can be changed with the changes in circumstances unlike static budget which remains static with no changes.

Flexible budget has the feature of adapability of any changes in the industry, which makes the budget closer to reality and provide a correct position for better decision making.

Flexible budget will also help in better comparision with actual results.