Question

____ occurs when a manager deliberately underestimates revenues or overestimates costs.

a. Budgetary slack
b. Pseudoparticipation
c. Goal congruence
d. Setting standards too high
e. None of these

Answer 1

Budgetary slack occurs when a manager deliberately underestimates revenues or overestimates costs to create a cushion or safety net.

Step-by-step explanation:

The term that describes when a manager deliberately underestimates revenues or overestimates costs is budgetary slack.

Budgetary slack is the intentional padding of budget estimates to create a cushion or safety net for the manager. This allows the manager to potentially exceed targets or have resources available in case of unexpected expenses or uncertainties.

For example, a manager may intentionally underestimate revenues to lower expectations and make it easier to achieve or exceed targets. Similarly, they may overestimate costs to secure more resources than actually needed.