ACCA Performance Management (F5) Certification Practice Exam

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What is the main function of feedforward control in budgeting?

To assess the effectiveness of outputs
To compare budgeted results with actual outputs
To compare budgeted results against a forecast
To change costs based on activity levels

The correct answer is: To compare budgeted results against a forecast

Feedforward control in budgeting primarily focuses on comparing budgeted results against a forecast. This method emphasizes proactive measures, which allow organizations to anticipate potential variances before they occur, rather than reacting to them after the fact. By analyzing forecasted data, management can make informed decisions about resource allocation, set realistic performance targets, and implement necessary adjustments in advance. This forward-looking approach is critical because it enables organizations to align their strategic goals with operational plans, thus ensuring that they are well-prepared for future activities. The other options, while related to aspects of performance management and budgeting, do not capture the primary function of feedforward control. They either pertain to assessing past performance or adjusting current activities based on results, which is not the core function of feedforward control. This proactive nature of feedforward control is essential for effective budgeting and overall organizational performance.