Unless Properly Controlled, a "Bottom-Up" Budgeting Process Can Lead To

question 98

Multiple Choice

Unless properly controlled, a "bottom-up" budgeting process can lead to:

• A) Excessively tight (i.e., difficult-to-achieve) budgets.
• B) Easy budget targets.
• C) Excessive downward communication.
• D) Reduced incentives for participation.
• E) Reduced levels of "budgetary slack."

Identify and classify decisions as either tactical or strategic.

Recognize the types of costs relevant to decision making, including sunk costs, opportunity costs, and joint costs.

Understand the relevance of information, including its characteristics, for making informed decisions.

Describe the role of management accountants in the decision-making process.

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Definitions:

Financial Account

A component of a country's balance of payments that records all transactions involving the purchase or sale of financial assets.

Hypothetical Data

Data or information that is assumed or simulated based on certain conditions or parameters, used for theoretical analysis or making predictions.

Surplus

A situation where the quantity of goods or services supplied exceeds the quantity demanded at the current price.

Deficit

The amount by which expenses exceed income or revenues, commonly used in the context of government budgets.