Which of the Following Is a Potential Disadvantage of Participative

question 152

Multiple Choice

Which of the following is a potential disadvantage of participative budgeting?

• A)Managers may build slack into the budget.
• B)Managers are more likely to be motivated by budgets they helped to create.
• C)Managers should have more detailed knowledge for creating realistic budgets.
• D)None of the above are true.

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Definitions:

Rational Decisions

Choices made by individuals that align with their own self-interest and are based on an evaluation of the costs and benefits of the action.

Marginal Costs

The extra financial burden of generating one additional unit of a good or service.

Marginal Benefits

The incremental satisfaction or advantage obtained from the consumption of an additional unit of a good or service.

Marginal Cost

Marginal cost is the increase in total production cost that arises from producing one additional unit of a good or service.