Which of the following is an advantage of participative budgeting?
A) It ensures only superficial participation from lower-level managers.
B) It rules out the possibility of building budgetary slack.
C) It helps managers to set the budgets that are either too loose or too tight.
D) It fosters a sense of responsibility and encourages creativity.
E) There are no advantages of participative budgeting.

Question

Quizplus · Accepted Answer

Participative budgeting fosters a sense of responsibility among lower-level managers as they feel more engaged in the budgeting process. It also encourages creativity as managers provide their input and suggestions. Option A is incorrect as participative budgeting involves increasing participation of lower-level managers. Option B is incorrect as building budgetary slack may still occur in participative budgeting. Option C is incorrect as participative budgeting aims to set realistic budgets. Option E is incorrect as there are advantages of participative budgeting.

Which of the Following Is an Advantage of Participative Budgeting