Question

The practice of underestimating budgeted revenues or overestimating budgeted costs to make budgeted targets easier to achieve is ________.

Answer 1

Budgetary slack is the practice of underestimating budgeted revenues or overestimating budgeted costs to make budgeted targets easier to achieve. It is a common practice in business and financial management.

Step-by-step explanation:

The practice of underestimating budgeted revenues or overestimating budgeted costs to make budgeted targets easier to achieve is known as budgetary slack. It is a common practice in business and financial management to create a buffer or cushion in the budget to ensure that targets are met.

For example, a company may intentionally underestimate its expected sales or overestimate its expenses in order to appear more successful or to avoid scrutiny from upper management. This practice can help create a sense of accomplishment when targets are met, but it can also lead to unrealistic expectations and inefficiency.