Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 9

What are the advantages and disadvantages of starting the budgeting process early in the year versus later in the year prior to the budget year?

Step 1 of 2

Advantages and disadvantages of starting the budgeting process early in the year prior to the budget year:

The advantage of starting the budgeting process early in the year prior to the budget year is that there would be enough time for detailed analysis and to address all aspects of the budget. However, starting the budgeting process early in the year prior to the budget year has a disadvantage too. The disadvantage of starting the budgeting process early is that the forecasts and estimates made so early may not be as accurate as it should be due to lack of current data.