Slack in operating budgets
A)results from unintentional managerial acts.
B)makes an organization more efficient and effective.
C)requires managers to work harder to achieve the budget.
D)is greater when managers are allowed to participate in the budgeting process.

Question

Quizplus · Accepted Answer

Slack in operating budgets often occurs when managers, who participate in the budgeting process, intentionally underestimate revenues or overestimate expenses to make their performance appear better or to create a cushion that makes it easier to achieve budget targets. This does not inherently make an organization more efficient or effective, nor does it necessarily stem from unintentional acts or require managers to work harder to achieve the budget.

Slack in Operating Budgets