Question

Ahmed is the manager of the bindery department at a local printing company. They were just told that they are over budget on the depreciation of the bindery equipment. They knew they had purchased a new piece of equipment, but they were not involved in the buying decision. What type of budgeting process does the company Ahmed work for use?

Answer 1

The budgeting process Ahmed's company uses appears to be top-down, as management decisions on budgetary allocations are made without direct input from departmental managers like Ahmed.

Step-by-step explanation:

The situation described suggests that Ahmed's company likely uses a top-down budgeting process. In top-down budgeting, senior management creates the budget with little to no input from lower-level managers, like Ahmed, who are then informed of their budget constraints.

Since Ahmed was not involved in the decision to purchase the new equipment but is responsible for staying within the assigned departmental budget, it indicates that budgetary decisions and allocations are made without direct involvement from the department managers.

This top-down approach can lead to situations where managers find themselves over budget due to decisions made above their paygrade, reflecting a lack of communication and collaboration in the budgeting process.