A department manager intentionally overestimates the expected costs of a new project and underestimates the expected sales revenues to ensure the final targets are easy to achieve. In managerial accounting, this practice is referred to as:

Correct answer: B) Budgetary slack

Explanation

Budgetary slack (or padding) occurs when managers intentionally understate expected revenues or overstate expected expenses to create a 'cushion,' making their budget targets easier to achieve and maximizing their chances of earning bonuses.