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This is an answer to a correct Kaplan MCQ.
It says,
Incremental budgets are appropriate ? For administration costs when the experience of the managers is limited.
I don’t understand how.. Can you please explain this?
Oh dear – this does seem like another rather poor question in the Kaplan Kit (I do not have the Kaplan Kit, only the BPP Kit).
Administration costs are likely to be fixed costs and so increase just by wage increases, and then it would be appropriate to use incremental budgeting. I do not know why the fact that they have limited experience is relevant (unless it is referring to the experience of the managers producing the budgets, in which case incremental is easier 🙂 )
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