Page 4 - Budgeting
P. 4
Top-down vs. Bottom-up
Bottom-up budgets (participative
Top-down budgets:
budgeting):
• Knowledge: Top management can • Knowledge: Lower levels have more
make accurate aggregate forecasts. knowledge than top.
• Decision rights: Begin with aggregate • Decision rights: Person being held
forecasts for firm, and then responsible for meeting the target
disaggregate down to lower levels. makes the initial budget forecast.
• Control more important than • Decision making more important
decision management. than decision control.
