Question

Assume that a company evaluates and rewards its managers based on their ability to achieve budgeted goals. Why would the same company ask its managers to participate in setting their budgeted standards?

Answer 1

Involving managers in setting their budgeted standards can help develop a sense of ownership and responsibility, and tap into their expertise to create more accurate and realistic standards.

Step-by-step explanation:

In a company where managers are evaluated and rewarded based on their ability to achieve budgeted goals, asking managers to participate in setting their budgeted standards can have several benefits.

Firstly, involving managers in the budgeting process can help them develop a sense of ownership and responsibility for the budget. When managers are involved in setting their own goals and targets, they are more likely to be motivated and committed to achieving them.

Secondly, managers have firsthand knowledge and experience of their respective departments or areas of responsibility. By involving them in the budgeting process, the company can tap into their expertise and insights to create more accurate and realistic budgeted standards. This can lead to better decision-making and higher chances of meeting the budgeted goals.