Question

*10) A stretch budget is a budget that ________.*

A) crosses more than one responsibility center
B) represents a challenging but achievable level of performance
C) is impossible to implement in a cost center
D) is designed to include the effects of exchange rate fluctuations
Objective 6.6

Answer 1

A stretch budget represents a challenging but achievable level of performance, encouraging efficiency and innovation in meeting financial goals, while considering opportunity costs and distinguishing between necessary and wasteful spending.The correct answer is option B.

Step-by-step explanation:

A stretch budget is a budget that represents a challenging but achievable level of performance. This type of budget pushes the boundaries of what is expected, but still remains within the realm of possibility.

It encourages efficiency and innovation to meet financial goals that are ambitious yet attainable. In the context of budget constraint, a stretch budget takes into consideration the effects that changes in income and prices can have on spending and resource allocation.

The creation of a stretch budget requires understanding the opportunity costs involved in financial decisions and distinguishing between necessary expenditures and potentially wasteful spending.The correct answer is option B.