How can an organization prevent budgetary slack in the budgeting process since the bonuses of managers are tied to the budget?
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.
How can an organization prevent budgetary slack in the budgeting process since the bonuses of managers are tied to the budget?
Budgetary slack can be prevented by thr following ways :-
1) By having a small group of managers for creating the budget so that only the decisions which are based on experience can be taken considering the organizational goals.
2) By disassociating meeting budget targets with performance.
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