The Two Common Approaches to Budgeting Are the Top-Down Budget

question 137

Short Answer

The two common approaches to budgeting are the top-down budget approach and the bottom-up approach.Both methods have advantages and disadvantages both from a practical standpoint and behavioral issues.List two advantages related to each method and two disadvantages that create problems with each approach.

---

Definitions:

Administrative Expenses

Costs related to the general operation of a business, including salaries of executive staff, office supplies, and utility expenses, but not directly tied to production or sales.

Materials Requisition

A document or electronic form used to request materials needed for production from the storeroom or inventory management.

Storeroom

A room used for storing goods, materials, or supplies within a business or organization.

Finished Goods

Items that are fully manufactured and available for purchase by consumers.