Question

Which term describes the situation in which a manager intentionally overbudgets expenses or underbudgets revenue? a. benchmarking b. budgetary slack c. strategic planning d. participative budgeting

Answer 1

The term which describes the situation in which a manager intentionally overbudgets expenses or underbudgets revenue is budgetary slack.

Budgetary slack occurs when managers authorized persons deliberately underestimate budgeted revenues or overbudgets expenses in order to make it easier to achieve budgetary goals. Thus, this is done to achieve higher results than the budgeted estimation to earn the bonus points.

Budgetary slack occurs when there is a lack of information and knowledge to the management or the budget preparer. It can also occur when the top management does not analyze the budgets properly.

Thus, before approving the budgets, it should be properly evaluated by the top management.

Hence, option B is correct.

To learn more about budgetary slack here:

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