Certification in Supplier Diversity Practice Exam

Which of the following is a main advantage of a program planning budgeting system?

1. It eliminates the need for productivity measurements

2. It enables management to evaluate various programs

3. It provides fixed cost estimates

4. It limits financial reporting requirements

The correct answer is: It enables management to evaluate various programs

A program planning budgeting system offers a significant advantage in that it enables management to evaluate various programs effectively. This system is designed to assess the efficiency and effectiveness of different programs within an organization, ensuring that resources are allocated towards initiatives that align with the strategic goals. By focusing on programs, management can compare the potential benefits and costs associated with each, leading to informed decision-making. The ability to evaluate various programs helps in prioritizing funding and resources, facilitating a clearer understanding of how each program contributes to the overall organizational mission. This capability is essential for achieving organizational objectives and ensuring optimal use of resources. The other options highlight points that are not inherent advantages of a program planning budgeting system. For instance, it does not eliminate the need for productivity measurements, as these metrics are often essential in determining a program's success. Similarly, while cost estimates may be part of the process, they are not strictly fixed nor are they the primary focus of a program planning budgeting system. Lastly, limiting financial reporting requirements is not typically associated with the advantages of this budgeting approach, as it often necessitates detailed reporting to track program impact and expenditures.