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Chapter 14





                           Budgeting






               6.1  The principal budget factor

               A factor which places a limit on the activities of an organisation. For most
               companies this will be the level of sales that they can generate.

               Budget preparation should always start with a budget for the principal budgetary
               factor.


               6.2  Top down vs bottom up

                             Top Down                                          Bottom up

                              Senior                                             Senior
                          management                                         management




                           Middle-line                                        Middle-line

                            managers                                           managers



                           Operational                                        Operational
                            managers                                           managers



                          Quicker                                           Better decisions

                          Better for goal congruence                        Motivates

                          Better co-ordination                              Budgets are more
                                                                              acceptable
                          Avoid budgetary slack















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