Suitability of imposed style

1. When organization culture is autocratic and employees are familiar with it.
2. If the departmental/divisional managers do not have experience/capability to prepare budget.
3. If the company has limitied time to prepare the budget.
4. Cost required to prepare the budget.
5. Majority of costs is uncontrollable.

Suitability of Participative style

1. When the culture of organization is democratic and employees like to involve in decision making process.
2. Departmental/Divisional managers have experience/capability to prepare budget.
3. Sufficient time available for budget preparation.
4. Funds are allocated for budget.
5. Majority of cost is controllable.

Advantages / Disadvantages of budgeting styles

Imposed Participative
Motivation DISADV ADV
Responsibility Accounting DISADV ADV
Realistic DISADV ADV
Expenditure ADV DISADV
Slack ADV DISADV if the allocated resources are higher than the required resources.
Time ADV DISADV

for example

budegt 50000
required 40000
slack 10000
Actual 48000

Variance 2000 Fav Good

Variance -8000 adv Bad

Suitability of incremental budeting

1. Market and economic environment is stable.

2. The cost is non discretionary in nature for which no justification is required.
3. Less time required and cost also.

Suitability for zero based budgets

1. The cost is discretionary in nature.

2. Company should have time and money to prepare.
3. Skilled staff is required.
4. More used in Public sector organization.

Advantages / Disadvantages of budgeting styles

Incremental Zero
Motivation DISADV ADV
Responsibility Accounting DISADV ADV
Realistic DISADV ADV
Expenditure ADV DISADV
Slack DISADV ADV
Time ADV DISADV
ing process.

than the required resources.