Specific Budgets Limitations

Question 1

State 3 limitations of specific budgets…

Answer 1

Figures may be inaccurate
Budgets may demotivate staff
Can be time-consuming to prepare and monitor
Increase short term costs

Question 2

Figures may be inaccurate

Answer 2

Sales budget is hard to get right especially for a new business. Has knock on effects on all other budgets

Question 3

Budgets can be restrictive and prevent improved business performance.

Answer 3

Production budgets may limit the amount of goods available for unexpected orders.

Question 4

Budgets can demotivate staff

Answer 4

Unachievable sales budget will not motivate sales staff. Labour budgets that rush how long it should take to make goods also demotivates

Question 5

Budgets can be time consuming to prepare and monitor

Answer 5

Lots of research is needed to prepare an accurate sales budget

Question 6

Budgets can increase costs in the short term

Answer 6

True for all budgets, but only if business needs a new employee or computer software to prepare and monitor it.