Is budgetary slack a desirable feature? Can it be prevented? Why or why not?

80.2K

Verified Solution

Question

Accounting

Is budgetary slack a desirable feature? Can it be prevented? Whyor why not?

Answer & Explanation Solved by verified expert

4.2 Ratings (881 Votes)

Q1 Is budgetary slack a desirable feature Can it be prevented Why or why not Answer Budgetary slack is a cushion created in a budget by management to increase the chances of the actual performance beating the budget Budgetary slack can take one of two forms an underestimate in the budget of the amount of income or revenue that will come in over a given amount of time or an overestimate of the expenses that are to be paid out over the same time period For example if a senior managers bonus is tied to meeting certain budget targets then adjusting the budget for a more favorable outcome would be incentivized Managers putting a budget together could lowball revenue projections pump up estimated expense items or both to produce numbers that will not be hard to beat for the year However sometimes it is genuinely the case that management See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member