Top Management Can Reduce Slack by Using a Bonus System

question 30

True/False

Top management can reduce slack by using a bonus system to link performance to the budget.

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Definitions:

Sales Mix

The composition of different products or services sold by a company, affecting its overall profitability.

Fixed Costs

Costs that remain constant regardless of production or sales volumes, including rent, salaries, and insurance costs.

Operating Leverage

A measure of how a company's operating income responds to a change in sales volume, indicating the proportion of fixed versus variable costs.

Variable Costs

Expenses that vary based on the amount of products or services a company generates.