Question

Which of the following is an example of the benchmarking function of the budgeting process? A budget demands integrated input from different business units and functions.
Budgeting requires close cooperation between accountants and operational personnel.

Budget figures are used to evaluate the performance of managers.

The budget outlines a specific course of action for the coming period.

Answer 1

Answer:

The benchmarking function of budgeting system involves the evaluation of performance of managers.

The correct answer is C

Explanation:

The integration of inputs from different business inputs and function is done at the planning stage of budgeting. It does not involve benchmarking.

Budgeting requires requires close cooperation between accountants and operational personnel. This is referred to as active participation in  budgeting. It helps to overcome behavioural challenges of budgeting.

Budget figures are used to evaluate the performance of managers. This is a benchmarking function of budgeting because it involves the comparison of performance of managers with established criteria so as to determine their level of success.                                          

The budget outlines a specific course of action for the coming year. This indicates that a budget is a financial plan that outlines future courses of action. This does not require benchmarking.