What occurs when a manager deliberately underestimates revenues or overestimates costs?

Question

Quizplus · Accepted Answer

Deliberately underestimating revenues or overestimating costs creates budgetary slack, which is the intentional inflating of budgeted expenses or deflating of budgeted revenues in order to make budget targets easier to achieve. This can lead to a budget that is not a realistic reflection of actual expenses and revenues, making it difficult to evaluate actual performance against budgeted targets.

What Occurs When a Manager Deliberately Underestimates Revenues or Overestimates