Which of the following is an advantage of participative budgets?

Which of the following is an advantage of participative budgets?

• A. Decreased motivation among managers
• B. Increased commitment from managers
• C. Slower budget preparation
• D. More disputes during budget preparation

Answer: (B)

Participative budgets involve managers at all levels in the budgeting process, which can significantly enhance their sense of ownership over the budget. This approach often leads to increased commitment from managers because they have contributed their insights and expertise in creating the budget. When individuals are involved in setting targets and planning, they are more likely to be invested in the outcomes and work towards achieving the goals laid out in the budget. Furthermore, participative budgeting can lead to more accurate budgets, as managers who work closely with specific operations can provide valuable input regarding realistic financial expectations and constraints. The level of engagement this method fosters can also lead to improved morale and motivation, as managers feel valued and recognized for their involvement in the decision-making processes. The other potential advantages, such as the quality of the budget, accountability, and communication within the organization, are often improved by this method, reinforcing the benefits of increased commitment among managers.

Participative budgets involve managers at all levels in the budgeting process, which can significantly enhance their sense of ownership over the budget. This approach often leads to increased commitment from managers because they have contributed their insights and expertise in creating the budget. When individuals are involved in setting targets and planning, they are more likely to be invested in the outcomes and work towards achieving the goals laid out in the budget.

Furthermore, participative budgeting can lead to more accurate budgets, as managers who work closely with specific operations can provide valuable input regarding realistic financial expectations and constraints. The level of engagement this method fosters can also lead to improved morale and motivation, as managers feel valued and recognized for their involvement in the decision-making processes.

The other potential advantages, such as the quality of the budget, accountability, and communication within the organization, are often improved by this method, reinforcing the benefits of increased commitment among managers.