"Budgetary slack" occurs when: Employees refuse to adhere to budgeted plans and operations. The budget is so difficult to meet that employees slack-off from work. An authoritative, or imposed, budgeting process is used. To "meet" budget objectives, employees ask for resources in excess of what they need. Employees ask for fewer resources than they need, in order to continuously improve.

"Budgetary slack" occurs when: Employees refuse to adhere to budgeted plans and operations. The budget is so difficult to meet that employees slack-off from work. An authoritative, or imposed, budgeting process is used. To "meet" budget objectives, employees ask for resources in excess of what they need. Employees ask for fewer resources than they need, in order to continuously improve.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 2DQ: Briefly describe the type of human behavior problems that might arise if budget goals are set too...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

"Budgetary slack" occurs when:
Employees refuse to adhere to budgeted plans and operations.
The budget is so difficult to meet that employees slack-off from work.
An authoritative, or imposed, budgeting process is used.
To "meet" budget objectives, employees ask for resources in excess of what they need.
Employees ask for fewer resources than they need, in order to continuously improve.

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A budget is most likely to be effective if it is not used to evaluate a manager's performance. employees and managers at the lower levels do not get involved in the budgeting process. it is used to assess blame when things do not occur according to plans. it has top management support.
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem? Allowing employees the opportunity to be a part of the budget process Allowing goals to be so low that employees develop a "spend it or lose it" attitude Setting goals too tightly making it difficult to meet performance expectation Setting goals among managers that conflict with one another
When a manager is prohibited to exceed its spending from the allowable budget, it may Select the correct response: eliminate the need for comparisons of budgeted and actual amounts usually reduce the need to prepare a cash budget. result to improved profitability of the company cause harm to the performance of the company
Budget slack is the situation in which a. there is an intentional overstatement of expenses. b. there is an intentional overstatement of revenues. c. the company is ahead of schedule in preparing the budget. d. sales are slow during certain budget periods.
If a manager is not able to meet the budget and it has been ________________ , the manager can alwayssay that the budget was unreasonable or unrealistic to start with, and therefore was impossibleto meet.
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following situations will likely lead to human behavior problems? a. allowing employees the opportunity to be a part of the budget process b. setting goals too loosely, creating a budgetary slack c. setting goals that are consistent across the firm d. setting goals that are reasonable and attainable
The budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a budget at the end of the budget period, a practice often called “use it or lose it.” The view is that if a department manager does not spend the budgeted amount, top management will reduce next year’s budget by the amount not spent. To avoid losing budget dollars, department managers often spend all budgeted amounts regardless of the value added to products or services. All of us pay for the costs associated with this budget system. Required Write a half-page report to a local not-for-profit organization or government agency offering a solution to the “use it or lose it” budgeting problem.
Briefly describe human behavior problems that might arise if budget goals are set too tightly. What behavioral problems are associated with setting a budget too loosely? When would a company use zero-based budgeting? Why should the production requirements outlined in the production budget be carefully coordinated with the sales budget?
All of the following are necessary for budgets to be effective except Select one: a. Employees affected by a budget should be consulted when it is prepared. b. All budgeted amounts must be spent to ensure that budgets arent reduced for the next period c Coals should be challenging and attainable O d Managers must be aware of potential negative outcomes of budgeting. such as budgetary slack
Slack in operating budgets makes an organization more efficient and effective. requires managers to work harder to achieve the budget. results from unintentional managerial acts. is greater when managers are allowed to participate in the budgeting process.
Which of the following factors will most likely have a negative impact on a manager's motivation with regards to the budget? O The budget targets are challenging but attainable. O The manager's input was highly regarded throughout the budget vetting process. O The budget includes some budgetary slack. O The budget provides too little scope for managers to perform their dutics,
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