Ashley Finn is a new production manager. After a great deal of effort including considerable market research she completes her budget and submits it to her boss Keith Payne. Without even looking at it he asks her what her "fudge factor" was and which items contained the most slack. Ashley very surprised responds that she doesn't use any "fudge factor" and that all her figures are honest. Mr. Payne counters by asking her how she would respond if she had to cut about 20% from her budget as it is. He tells her that most budgets are trimmed in committee and she had better be ready. He returns the budget to her and tells her to come back with something reasonable.
Required:
1. Is it ethical to build slack into a budget? Explain.
2. Was it ethical for Mr. Payne to refuse to accept a budget without slack? Briefly explain.

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The Answer of Ashley Finn is a new production manager. After a great deal of effort including considerable market research she completes her budget and submits it to her boss Keith Payne. Without even looking at it he asks her what her "fudge factor" was and which items contained the most slack. Ashley very surprised responds that she doesn't use any "fudge factor" and that all her figures are honest. Mr. Payne counters by asking her how she would respond if she had to cut about 20% from her budget as it is. He tells her that most budgets are trimmed in committee and she had better be ready. He returns the budget to her and tells her to come back with something reasonable.
Required:
1. Is it ethical to build slack into a budget? Explain.
2. Was it ethical for Mr. Payne to refuse to accept a budget without slack? Briefly explain.

Ashley Finn Is a New Production Manager