Case 1
Tasks:
Describe what participative budgeting is, including its benefits and shortcomings.
Summarize two good scholarly journal articles on participative budgeting.
Case 2
Ashley Finn is a new production manager. After a great deal of effort, including considerable market research, she completes her budget and submits it to her boss, Keith Payne. Without even looking at it, he asks her what her “fudge factor” was and which items contained the most slack. Ashley, very surprised, responds that she doesn’t use any fudge factor and that all her figures are honest. Payne counters by asking her how she would respond if she had to cut about 20% from her budget, as it is. He tells her that most budgets are trimmed in committee and she had better be ready. He returns the budget to her and tells her to come back with something reasonable.
Tasks:
Analyze if it is ethical to build slack into a budget.
Explain if it was ethical for Payne to refuse to accept a budget without slack.