Budgeting Controls Performance via Variance Analysis

Steps:

• Set financial targets in a budget based on business goals.
• Track actual results during operations.
• Compare actual performance against budgeted figures to identify variances.
• Analyze variances to take corrective actions for better control.

Why A is correct:

• Budgetary control is defined as the process of comparing actual results with budgeted standards to detect deviations and ensure performance aligns with plans.

Why the others are wrong:

• B: Competitor comparison aids benchmarking but not internal budgetary control.
• C: Industry averages provide external benchmarks, unrelated to budget-specific control.
• D: Historical comparisons track trends but ignore budgeted targets for proactive control.

Final answer: A