Final answer:
Most budgets include a contingency of 2-3 percent to cover unforeseen expenses. This standard range allows for minor unexpected changes in budget planning and is a safe practice to manage risk without misallocating resources.
Step-by-step explanation:
Most budgets incorporate a contingency to account for unforeseen expenses or to provide a cushion for unexpected changes in the budget's allocations. The correct answer to the question regarding the typical percentage of a contingency in budgets is A. 2-3 percent. This range is considered reasonable to cover minor deviations or surprises that may not have been anticipated in the original budget planning.
For example, looking at various sectors, the Federal Budget in Fiscal Year 2020, according to the Congressional Budget Office, displays that mandatory and discretionary spending consist of different proportions of the total budget, which are, in this case, 66 percent and 19 percent respectively. In the context of a school budget involving financial aid to students, without specific information on the distribution of funds, the percentage of students that can be expected to receive a certain amount of aid cannot be precisely determined. However, a typical discretionary budget, as discussed by the National Priorities Project for the year 2015, would see allocations to various sectors, like military, education, and health, based on proposed policies and available funds.
These figures illustrate the principle of using a small contingency as a safe practice in budget planning to manage risk without overinflating the budget and potentially misallocating resources.