
Concept explainers
: The probable benefit that the company receives while starting the process of budgeting.

Answer to Problem 1QC
Solution:d) All of the above.
Given: A company can expect to receive which of the following benefits when it starts its budgeting process.
a) The budget provides managers with a benchmark against which to compare actual results for performance evaluation.
b) The planning required to develop the budget helps managers foresee and avoid potential problems before they occur.
c) The budget helps motivate employees to achieve sales and cost-reduction goals.
d) All of the above.
Explanation of Solution
:
The budget of a company is the plan set in advance for the allocation of resources and how these resources are going to be utilized to reach a predetermined goal. So, it becomes a prescribed standard which is used to compare with the actual results for the evaluation of performance.
The budget is a predetermined plan for achieving the predetermined objectives of a company. The process of planning helps in avoiding all the mistakes and drawbacks in the previous years and to be proactive in reaching the goals of the company. Thus, it helps to compare with the actual results for performance evaluation.
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Chapter 22 Solutions
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