Which budgeting method is designed to control expenditures through managerial incentives?

Which budgeting method is designed to control expenditures through managerial incentives?

• A. Incremental Budgeting
• B. Zero Base Budgeting
• C. Expenditure Control Budgeting
• D. Performance-Based Budgeting

Answer: (C)

The budgeting method designed to control expenditures through managerial incentives aligns closely with the principles of performance-based budgeting. This approach focuses on linking funding to the results or performance achieved by departments or programs. By establishing clear performance metrics and goals, management is incentivized to use resources efficiently and effectively to meet those objectives. Performance-based budgeting encourages managers to think critically about their resource allocation and the outcomes they are responsible for producing. This method emphasizes accountability and results, as it aligns funding with specific performance indicators, thus incentivizing cost control and promoting a culture of efficiency. The recognition of outcomes and the evaluation of performance as part of the budgeting process is what distinctly sets this method apart and emphasizes the managerial incentives for controlling expenditures. In contrast, methods like incremental budgeting may not actively incentivize efficient resource use, as they primarily adjust previous budgets by adding or subtracting from existing figures rather than assessing performance outcomes.

The budgeting method designed to control expenditures through managerial incentives aligns closely with the principles of performance-based budgeting. This approach focuses on linking funding to the results or performance achieved by departments or programs. By establishing clear performance metrics and goals, management is incentivized to use resources efficiently and effectively to meet those objectives.

Performance-based budgeting encourages managers to think critically about their resource allocation and the outcomes they are responsible for producing. This method emphasizes accountability and results, as it aligns funding with specific performance indicators, thus incentivizing cost control and promoting a culture of efficiency.

The recognition of outcomes and the evaluation of performance as part of the budgeting process is what distinctly sets this method apart and emphasizes the managerial incentives for controlling expenditures. In contrast, methods like incremental budgeting may not actively incentivize efficient resource use, as they primarily adjust previous budgets by adding or subtracting from existing figures rather than assessing performance outcomes.