A manager estimates that revenues for the coming period will be $85,000 but includes only $80,000 in her budget.This is an example of
A)Pro-forma variance.
B)Revenue slack.
C)Budgetary padding.
D)None of these ans choices are correct.

Question

Quizplus · Accepted Answer

Budgetary padding is the practice of intentionally underestimating revenues or overestimating expenses to create a buffer or contingency in the budget. In this scenario, the manager has deliberately included a lower amount of revenues in the budget than expected, which is an example of budgetary padding. Pro-forma variance refers to the difference between budgeted and actual results, and revenue slack refers to the deliberate overestimation of expenses. Therefore, neither of these choices are correct in this scenario.

A Manager Estimates That Revenues for the Coming Period Will