If Brenda Thompson, Tom Mix's Supervisor, Wanted to Use a Budgeting

question 9

Multiple Choice

If Brenda Thompson, Tom Mix's supervisor, wanted to use a budgeting process to help evaluate Tom's performance but wanted to ensure that using a budget did not encourage Tom to focus on short-term behaviors at the expense of long-term results, she should

• A) develop the budget herself using realistic goals based on the economic reality facing Tom's function and use both quantitative and qualitative evaluations of the performance of Tom's function and then give the budget to Tom to follow.
• B) work with Tom in an open and participative process to develop the budget based on the most optimistic scenario possible and use both quantitative and qualitative evaluations of the performance of Tom's function.
• C) develop the budget herself based on the most pessimistic scenario possible and use both quantitative and qualitative evaluations of the performance of Tom's function and then give the budget to Tom to follow.
• D) work with Tom in an open and participative process to develop the budget based on the economic reality facing Tom's function and use both quantitative and qualitative evaluations of the performance of Tom's function.

---

Definitions:

Profit-Maximizing

The process or strategy of adjusting production and operation methods to achieve the highest possible profit.

Loss-Minimizing

A strategy or approach aimed at reducing the financial losses of a business or economic activity to the lowest possible level.

Level of Output

The total quantity of goods and services produced by an economy or a firm in a given period.

Most Efficient Level

The point at which a process or system operates at maximum productivity with the least waste of resources, often sought in production, energy use, and economic activities.