Research Has Shown That Having Several Levels of Management Participate

question 75

Multiple Choice

Research has shown that having several levels of management participate in the budgetary process is beneficial to both the company and the employees.However,there are certain behavioral problems encountered in the process,one of which is the use of budgetary slack.Budgetary slack can best be described as (CMA adapted)

• A)the elimination of certain expenses to enhance budgeted income.
• B)the planned overestimation of budgeted expenses.
• C)a "plug" number used to achieve a pre-set level of operating income.
• D)the planned underestimation of budgeted expenses.
• E)an inflation factor used to bring historic costs to current levels.

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Definitions:

Activity-based Costing

An approach to assigning an organization's overhead costs to specific products or services based on the activities undertaken to produce those products or services.

Direct Labour-hours

Direct labor-hours are the total hours spent by workers who directly contribute to the manufacture of a product, a direct measure of labor input.

Activity Cost Pools

Aggregations of all the costs associated with specific activities, used in activity-based costing to allocate costs more accurately.

Activity-based Costing

A costing method that assigns costs to products or services based on the activities they require, aiming to provide more accurate cost information.