When the operating budget is used as a control device, managers are less likely to be motivated to budget higher sales than actually anticipated.

Question

Quizplus · Accepted Answer

When the operating budget is used as a control device, managers are held accountable for meeting their budget targets. Therefore, they are less likely to intentionally overestimate projected sales in order to have more resources at their disposal. This promotes more accurate budgeting and better financial management.

When the Operating Budget Is Used as a Control Device