US CMA Part 1 · Chapter 2 · Question 5 of 30
What is budgetary slack?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The deliberate underestimation of revenues or overestimation of costs by managers so that budget targets are easier to achieve
Explanation
Budgetary slack (padding) arises when managers build cushions into their budgets, typically by understating revenue or overstating costs. It is most common in participative systems where performance is evaluated against the budget.
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