Fair Evaluation of Employee Performance in Budgetary Control

Steps:

• Recall that performance evaluation assesses variances between budgeted and actual results, considering controllable and uncontrollable factors.
• Analyze reason 1: Unrealistic budgets create unattainable targets, skewing evaluation.
• Analyze reason 2: Deviations from assumptions introduce external variances beyond employee control.
• Analyze reason 3: Training deficiencies represent internal factors employees can address but need support for.

Why A is correct:

• In management accounting, performance evaluation requires examining all variance causes (per standard variance analysis definitions) to distinguish between controllable employee actions and systemic issues for accurate accountability.

Why the others are wrong:

• B: Ignores training needs, an internal factor directly tied to employee capability.
• C: Excludes unrealistic budgets, a key planning flaw affecting target validity.
• D: Overlooks external and planning issues, leading to incomplete assessment.

Final answer: A