Final answer:
The response identifies A. It reduces the need for tracking actual cost activity as the incorrect option regarding the benefits of budgeting. Effective budgeting involves monitoring actual costs and can aid in performance evaluation, identifying bottlenecks, and enhancing planning efforts.
Step-by-step explanation:
The question concerns the benefits and misconceptions around the purpose and advantages of budgeting. The answer to the question of which is not a benefit of budgeting is A. It reduces the need for tracking actual cost activity. On the contrary, effective budgeting requires regular tracking of actual costs to compare with the budgeted amounts to manage financial performance and make informed decisions. Some key benefits of budgeting include B. It sets benchmarks for evaluation performance, C. It uncovers potential bottlenecks, and D. It formalizes a manager's planning efforts.
Budgeting can reveal wasteful expenditures and aid in achieving financial goals. What makes budgeting a challenge for many is the aspect of choice and the need to forego certain pleasures like daily Starbucks trips, entertainment subscriptions, etc. Budgeting also operates within a budget constraint framework focusing on future decisions without being influenced by sunk costs.
Moreover, budgeting aids in cost/benefit analysis by enabling individuals and organizations to weigh the marginal costs against marginal benefits to make informed choices.