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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Which of the following is not an advantage of budgeting?

  1. a. It forces managers to plan.
  2. b. It provides information for decision making.
  3. c. It guarantees an improvement in organizational efficiency.
  4. d. It provides a standard for performance evaluation.
  5. e. It improves communication and coordination.

To determine

Identify the option which is not an advantage of budgeting.

Explanation

Budgets:

Budgets are prepared for the planning and controlling purposes. Budgets facilitate planning and making decisions to achieve the desired objectives and are prepared to enable comparison between actual and expected outcomes.

c.

Budgets do not guarantee an improvement in organizational efficiency. Managers may or may not operate efficiently to achieve the target budget. Therefore, this is the correct option.

a.

Budgets are prepared on the basis of strategic plans of the company. In order to make budgets, managers have to set plans for the upcoming period. Therefore, this is not the correct option.

b...

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