What is Participative Budgeting?

Participative budgeting involves lower-level individuals in the budgeting process, contrasting with imposed budgeting where top management sets the budget. This approach fosters ownership and motivation, leading to more achievable budgets due to the input from those with firsthand knowledge of operations. However, it is time-consuming and may lead to budgetary slack, where individuals request more resources and set lower targets to ensure they meet objectives.

What are some drawbacks of participative budgeting?

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Explain the concept of budgetary slack in the context of participative budgeting.

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