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Management Accounting


Question 3 (6 marks) Critically discuss the following statements:Word limit for Question 3 - 750 words • ‘a budget is a forecast of what is expected to happen in a business during the next year’ • ‘budgets are okay but they stifle all initiative. No manager would work for a business that applies control through budgets.’ • ‘any sensible person would start with the sales budget and build up the other budgets from there.’ • ‘a budget trying to be realistic will not motivate best performance.’ • ‘only adverse variances are worth investigating, because favourable variances, by definition, must be good.’