Main Answer:
Performance-based budgeting aligns a division manager's $2.2 million budget with production outcomes, emphasizing efficiency and strategic resource utilization. 1. Performance-based budgeting.
Therefore, the correct answer is 1. Performance-based budgeting.
Step-by-step explanation:
Performance-based budgeting is a managerial approach where a division manager, in this case, is allocated a specific budget, in this instance, $2.2 million, and is evaluated based on the quantity of goods produced within that financial framework. It involves aligning the budget directly with performance metrics, emphasizing efficiency and productivity. In such a scenario, the manager's success is measured not just by staying within the allocated budget but also by optimizing output, ensuring that the budgeted funds are efficiently utilized to maximize production.
This approach encourages managers to strategize and implement cost-effective measures, fostering a culture of fiscal responsibility. It links financial allocation directly to performance outcomes, providing a clear incentive for managers to seek innovative ways to enhance production efficiency while adhering to budgetary constraints. Performance-based budgeting serves as a tool to align financial goals with operational objectives, ultimately contributing to the overall success of the organization.
In summary, when a division manager is given an operating budget of $2.2 million and evaluated based on the quantity of goods produced within that budget, it falls under the category of performance-based budgeting—a management strategy that intertwines financial allocations with performance outcomes.
Therefore, the correct answer is 1. Performance-based budgeting.