Question

“Budgetary Slack” occurs when

	a.	the budget is so difficult to meet that employees slack-off from work.
	b.	an authoritative, or imposed, budgeting process is used.
	c.	employees ask for resources in excess of what they need, in order to "meet" budget objectives.
	d.	employees ask for fewer resources than they need in order to continuously improve.

Answer 1

ANSWER: c

Employees ask for resources in excess of what they need, in order to "meet" budget objectives.

Bugetary slack is resorted to by middle-level departmental managers , under-estimate the revenues or income & over-estimate the expenses or resources required to produce the above referred revenues---while preparing budget figures for the ensuing fiscal period.

This is a deliberate exercise , to allow himself & the employees below him , some breathing space , for achieving some soft targets .This is done mostly for the following reasons:

1. so that the target can easily be achieved , without earning the wrath of the top management or the shareholders.

2..to earn good management scores for themselves , while being evaluated with actual performances-- which looks good when compared with the budget.

3. Escalating expenses & down-sizing revenues in the budget are done , so as not to divulge the true performance-capability of the wok-force , so that incentives can be claimed later for bettering the budget figures--namely improved actual revenues & lower actual expenses.

Hence the answer-c--- that more resources/expenses are budgeted to achieve the stated   objective ,ie. revenues .