Question

In a bottom-up approach, managers should have a ________ level of controllability and a ________ level of involvement in budget setting.

1. High, high
2. Low, high
3. Low, low
4. High, low

Answer 1

Answer: high, high

Explanation: in bottom up approach budged is made and controlled by managers of divisions

Answer 2

Answer:

The correct option is (1) High, high

Explanation:

Bottom-up Approach of Budget setting-

• Bottom-up budgeting is a method of creating budgets that begins at the departmental level and works its way up.
• Each department within the organization must create a list of the supplies it requires, the projects it intends to complete throughout the upcoming fiscal year, and cost projections.
• The total corporate budget is then calculated by adding the estimations of all the departments.
• Since they are aware of the projected costs for the projects to be carried out, the managers of each department are expected to contribute.

Advantages of Bottom up Approach-

1. Accuracy

Budget estimates are calculated using the bottom-up method, which increases the budget's accuracy and accountability. Since the employees are better situated to comprehend the prices, resources, expenses, and requirements of their respective departments, the estimates provided will be as accurate as possible.

2. Motivation

Employee involvement in budget creation inspires them to put in extra effort to meet organizational objectives. The budget estimates are created with input from the staff members in each area of the company, giving them a sense of ownership in the budgeting process.

Hence, we can say that , In a bottom-up approach, managers should have a high level of controllability and a high level of involvement in budget setting.

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