I am doing this question
Five inherent weakness of the annual budget model irrespective of the budgeting approach applied?
1. The future is never certain hence budgeting cannot be accurate
2. May not maximize the potential of the use of company resources
3. May encourage managers to have a short termism mind set to achieve high bonus
4. Budgeting time up management time and result in additional cost
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Budgeting
10y ago#1All ok. In addition:
Concentrates on financial and quantitative measures at the expense of non-quantitative
Effort can stop once budget is achieved
Might not be flexible enough to respond to environmental factors.
Can be subject to padding.
what is can be subject to padding
10y ago#3Eg budgeting costs higher than you expect them to be to
(a) Give you less pressure
(b) INcrease the chance of a favourable variance.
Also, budgeting sales lower than you really expect.
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