Budgetary slack provides management with a hedge against unexpected adverse circumstances.

Name: Budgetary slack provides management with a hedge against unexpected adverse circumstances.
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Question

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Budgetary slack is intentionally overestimating expenses or underestimating revenues to create a buffer or hedge against unexpected events or situations. It allows management to have some flexibility without having to adjust the budget in response to unforeseen circumstances.

Budgetary Slack Provides Management with a Hedge Against Unexpected Adverse