(Total: 20 marks)

According to your sales director, Preparing the budgets will be a challenging task given the unprecedented economic uncertainty during this COVID-19 pandemic. Budgets will not be useful for planning as everything is so uncertain. They will only demotivate the whole team and are not suitable for performance evaluation at all. We should abolish the budgets preparation for this year.

Required:

Do you agree with your sales director? Critically discuss the validity of the above statement from the viewpoint of planning, motivation and performance evaluation aspects of budgeting. In your discussion, present at least one practical illustration to support your conclusions for each of the budgeting aspect.