Question

What is budgetary slack and why do some managers build it in their budgets?

Answer 1

Budgetary slack is voluntary and deliberate over estimation of budgeted expenses or under estimation of budgeted revenue.

Some managers bulid it in their budgets because of following reasons:

1. Flexibility can be achieved in operation of business under unknown circumstances.

2. Depending upon performance of the middle level employees when compared to budget they are provided bonus and other allowances. So this lures them to introduce slack in their budgets.