Question

Which of the following statements concerning approaches for the budget development process is correct?

a. The authoritative approach to budgeting discourages strict adherence to strategic organizational goals

b. To prevent ambiguity, once departmental budgeted goals have been developed, they should remain fixed even if the sales forecast upon which they are based proves to be wrong in the middle of the fiscal year

c. With the information technology available, the role of budgets as an organizational communication device has declined

d. Because department managers have the most detailed knowledge about organizational operations, they should use this information as the building blocks of the operating budget

Answer 1

The correct option is option 'd' -

Because department managers have the most detailed knowledge about organizational operations, they should use this information as the building blocks of the operating budget

Reason- It is the department manager who is best aware of day to day operations, local issues that affect the department, opportunities for efficiencies, and obstacles to success. These factor will assist in developing a budget that includes challenging and realistic goals that are accepted by the manager and the employees.