Reference no: EM132743210

Question - Budgeting has been known to be a planning and control tool to help management in their planning, decision-making and implementation and control of business activities to ensure goal congruence.

Hayden, a newly recruited finance manager of a SMEE enterprise operating in the technology industry involved in much research and development of new technology for its products. In this industry, the consumer taste and patterns are constantly evolving and social media adoption had been prevalent amongst its competitors in recent years.

Hayden had been tasked by the CEO to investigate a better and more effective way of performing its budgeting exercise. The enterprise had been operating for the past decade, starting humbly as a small family business but has grown to its current size (turnover of $5 million each year). It had been adopting the traditional approach of incremental budgeting to-date. Hayden wonders about the following budgeting approaches and how they will be applicable in the context of SMEE enterprise.

Required - Describe the characteristics of the industry and company (and or product life cycle) that would be the most suitable for each of the budgeting approaches; justify your answers.

i. incremental budgeting

ii. zero based budgeting

iii. rolling budgeting