Advantages-disadvantages-imposed budgets, Managerial Accounting

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Advantages of Imposed budgets

Advantages:

They increase the probability that the organization strategic plans are incorporated into the planned activities.

They enhance the co-ordination between the plans and objectives of divisions.
They use senior management consciousness of net resource availability.
They decrease the possibility of inputs from inexperience or uniformed lower level employees.
They reduce the period of time taken to draw up the budget.

Disadvantages of Imposed budgets:

It may result in dissatisfaction, defensiveness and low morale among employees, who must implement the budget.
The feeling of team spirit might vanish.
The acceptance of organizations goals and objectives could be limited.
The sense of the budget as a punitive tool could arise.
Unachievable budget for overseas divisions may be imposed on local divisions if consideration is not given to the local operating and political environment.

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