One objective of budgeting is motivating managers to
A) Eliminate all variances.
B) Use resources efficiently.
C) Lessen the need for communication.
D) Establish prices for external sales of goods and services.

Question

Quizplus · Accepted Answer

The objective of budgeting is to motivate managers to use resources (such as labor or materials) efficiently, in order to meet the organization's financial goals. This is done by setting specific targets for performance, such as sales revenue or cost reduction, and holding managers accountable for achieving those targets. Eliminating all variances is not necessarily desirable or realistic, as some level of deviation from the budget is expected and can be useful for identifying areas for improvement. Budgeting also requires effective communication among managers and departments, so option C is incorrect. Option D is not a typical objective of budgeting.

One Objective of Budgeting Is Motivating Managers to