The maintenance department of an organization has been budgeted $500,000 for the current year's maintenance work. At the end of the fiscal year, the general ledger (or books) shows that they have only spent $450,000 on maintenance. To avoid being granted $450,000 the next year, the manager has decided to wastefully spend $50,000. This is an example of
A) budgetary slack.
B) imposed budget.
C) use-it-or-lose-it mentality.
D) zero-based budget.

Question

Quizplus · Accepted Answer

In the absence of proper controls, budgeting can lead to ethical issues like budgetary slack and use-it-or-lose-it attitude. With the use-it-or-lose-it attitude, managers spend all the allocated funds in the budget period to avoid being granted less funds in subsequent budgeting periods.

The Maintenance Department of an Organization Has Been Budgeted $500,000