Asked Dec 21, 2019

 “Budgeted performance is a better criterion than past performance for judging managers.” Do you agree? Explain.


Expert Answer

Step 1

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Budget: The budget is a statement in which the estimated standards are set according to the needs of the management. The management tries to achieve that standard to fulfill the financial objectives and at the end of the financial period evaluation is done.

Step 2

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Yes, a budgeted performance is a better criteria to measure the past performance for judging managers. The reasons for this is as follows: The budgets provide an estimated performance level which is used to measure with the actual performance. • The budgeted performance can be used because the budgets can overcome the certain limitations. • The first limitation is that the past results can often include the past failures and the substandard performance. The second limitation of using the past performance is that the future conditins are expected to be better than the past conditions. • As the budgeted performance overcomes both the limitations, hence it is a better criteria to judge the managers than the past performance.


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