Which top-down budgeting method is being employed when the budget is determined based on what is felt to be necessary?
A)Arbitrary allocation
B)Percentage of sales
C)Affordable method
D)Payout planning
E)Competitive parity

Question

Quizplus · Accepted Answer

Arbitrary allocation is a top-down budgeting method where the budget is determined based on what is felt to be necessary or what the top management thinks is appropriate. Unlike the affordable method or percentage of sales methods which have some basis or calculation behind them, the arbitrary allocation method is subjective and relies heavily on the discretion of the management. Therefore, choice A is the best answer to this question.

Which Top-Down Budgeting Method Is Being Employed When the Budget