_____ exists when managers deliberately underestimate revenues or overestimate costs to provide flexibility
A) Realistic standards
B) Monetary incentives
C) Budgetary slack
D) Management by exception

Question

Quizplus · Accepted Answer

Budgetary slack exists when managers deliberately overestimate costs and underestimate revenues in order to provide flexibility in case actual results are worse than expected. This creates a cushion in the budget that allows managers to meet their targets even if performance is subpar. Choices A, B, and D do not accurately describe this concept.

_____ Exists When Managers Deliberately Underestimate Revenues or Overestimate Costs