Question

Are budgets part of the performance measurement system or the performance reward system? a. Part of both the performance measurement system and the performance reward system b. Part of the performance measurement system only c. Part of neither the performance measurement system nor the performance reward system d. Part of the performance reward system only

Answer 1

Answer:

The correct answer is letter "A": Part of both the performance measurement system and the performance reward system.

Explanation:

Budgets are estimates a company outlines at the beginning of a period to determine the expenditures that must be incurred during the operations of the firm for the whole year. Part of the managers' work is evaluated based on how close the actual expenses match the budgeted estimates.  

In case the company's expenses are higher, investors may not consider the performance of the executives and the overall firm as appropriate. If the expenses are below the budget estimate at the productivity level desired, investors could be interested in maintaining or improving the current business process and being the rewards for managers higher.