Which budgeting approach links resource allocation decisions to performance criteria including both outputs and outcomes?

Which budgeting approach links resource allocation decisions to performance criteria including both outputs and outcomes?

• A. Line item budgets
• B. Performance Budget
• C. Program Budget
• D. Zero-based Budget

Answer: (B)

Performance budgeting links how money is allocated to the results it should produce. It ties funding to measurable performance criteria, including outputs (the services or products delivered) and outcomes (the changes or benefits achieved). This makes resources respond to what the organization actually accomplishes, not just what is spent. Line-item budgets focus on inputs like salaries and supplies, without tying those costs to results. Program budgeting organizes spending by programs and can consider objectives, but it doesn’t inherently require linking funding to performance outcomes. Zero-based budgeting starts from scratch each period and justifies all expenditures, but it isn’t defined by performance outcomes linked to funding. So, budgeting that directly ties resource allocation to performance criteria, including both outputs and outcomes, is the performance budget.

Performance budgeting links how money is allocated to the results it should produce. It ties funding to measurable performance criteria, including outputs (the services or products delivered) and outcomes (the changes or benefits achieved). This makes resources respond to what the organization actually accomplishes, not just what is spent.

Line-item budgets focus on inputs like salaries and supplies, without tying those costs to results. Program budgeting organizes spending by programs and can consider objectives, but it doesn’t inherently require linking funding to performance outcomes. Zero-based budgeting starts from scratch each period and justifies all expenditures, but it isn’t defined by performance outcomes linked to funding.

So, budgeting that directly ties resource allocation to performance criteria, including both outputs and outcomes, is the performance budget.