Question

The term “budget slack” refers to the following (1 mark): a. Additional capacity available which can...

The term “budget slack” refers to the following (1 mark):

a.

Additional capacity available which can be budgeted for.

b.

Extended lead time between the preparation of the functional budgets and the master budget.

c.

Deliberate over-estimation of costs and under-estimation of revenues in a budget.

d.

Difference between the budgeted output and the breakeven output.

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Answer #1

OPTION C------Deliberate overestimation of costs and under estimation of revenues in a budget

Budget slack refers to deliberate overestimation of costs and under estimation of revenues in a budget.This is conservative approach of managers in creating budget where costs are overestimated and revenues are under estimated

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