Under which budgeting approach are funds allocated for discrete activities such that evaluating cost by activity is challenging, and it is not commonly used due to expense?

• A. Spending-ceiling model
• B. Line-Item budgeting
• C. Performance budgeting
• D. Lump Sum budgeting

Answer: (C)

Performance budgeting links funding to programs and their results rather than to each individual task, so money is allocated based on expected outcomes rather than discrete activities. Because the focus is on achieving performance targets, costs aren’t traced easily to a single activity since multiple activities contribute to a given result and funding is pooled at the program level. This makes evaluating cost by activity challenging. The added burden of creating reliable performance metrics, collecting data, and conducting regular evaluations makes the approach more costly to implement, which is why it isn’t widely used. The other approaches either allocate funds by specific line items, making activity-level cost easy to track; provide a single lump sum that obscures activity costs but for reasons other than expense; or fix overall spending without tying dollars to outcomes.