Question

What are the Main Characteristics of Performance budget management systems?

Answer 1

Budget refers to a financial plan and it consists of planned expenditures and revenue.

Performance budgeting is a type of budgeting that states the purpose & goals for which money is required, costs of programs & related activities proposed to accomplish those goals and outcomes to be produced or services to be rendered under each program.

Main Characteristics are:

1) It states clearly the objectives for which funds are required

2) It states detailed cost of programs and related activities

3) It states clearly the output and outcomes that are expected out of the program

4) Cost and benefit of each activity is analyzed to make decision regarding allocation of money

5) It helps in long term planning and helps in eliminating activities which doesnt achieve performance level stipulated

6) It uses various management tools like benchmarking, unit costing, process costing etc.