CMA1 M1 Q71
- This topic has 3 replies, 2 voices, and was last updated 2 months, 2 weeks ago by Lynn Roden.
The right answer (“the planned overestimation of budgeted expenses.”) is not actually the best way to describe what Budgetary Slack is, cause it leaves out the other side of it, which is the underestimation of revenues. In reality, when preparing their segment’s budget, managers have a pre-set level of operational income, and they arrive at that number by either overestimating the unit’s expenses or underestimating its revenues. So, in that regard, the best way to describe what Budgetary Slack is is as a “plug” that lets managers arrive to income they want to be evaluated with.
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