ECONOMICS

Detailed explanation-1: -Easy budget targets. Unless properly controlled, a “bottom-up” budgeting process can lead to: A. Excessively tight (i.e., difficult-to-achieve) budgets.

Detailed explanation-2: -Bottom-up budgeting calculates budget estimates from the lowest level, which helps boost the accuracy and accountability of the budget. The process involves all the individuals in each department.

Detailed explanation-3: -In its most basic form, a bottom-up budget is a budget that is first generated by individual departments and then “pushed up” to senior management. The name “bottom-up” reflects where the budget originated and where it goes within the organization.

Detailed explanation-4: -What is bottom-up budgeting? Bottom-up budgeting refers to the flow of information from the ‘floor level’ employees in each department up towards senior management. Departments will decide their own forecasted expenses, and then request approval from higher ups.

Detailed explanation-5: -Participative budgeting also tends to produce budgets that are more achievable since lower-level employees are better positioned to inform their supervisors where funds need to be allocated. When an organization implements participative budgeting, it shows the top management’s confidence in its staff.