Well-designed budgets:
A) lead to desired changes in behaviour and minimise any undesired behaviour that results from the measurement process.
B) will ensure greater profitability.
C) are static.
D) will achieve all of the above.

Question

Quizplus · Accepted Answer

Well-designed budgets should be used as a tool to incentivize and direct behavior towards achieving desired outcomes. By aligning incentives with goals, budgets can ensure that resources are used efficiently and effectively. Additionally, budgets can help identify areas of undesired behavior and provide insights to mitigate or eliminate them. However, a well-designed budget does not necessarily guarantee greater profitability, as other factors such as market conditions or competition can affect profitability. Budgets should also not be static and should be reviewed regularly to ensure they remain relevant and aligned with strategic goals.

Well-Designed Budgets