Question

The top managers of Promedium Inc. are creating a master budget for the company. They require a statement of the budget goals from each of its departments to be able to make an appropriate master budget. Karren, the manager of the sales department, overstates her needs in the budget and presents the statement to the top managers. The outcome of Karren's actions is known as _____.

Answer 1

budget slack.

Step-by-step explanation:

A budget slack refers to a deliberate over estimation of expenses or under estimation of revenues. Either way, the person presenting the budget will try to lower their estimated profit or try to obtain more money for their department or division.

In this case, Karren is over estimating the expenses of her department. Probably she wishes to receive a larger amount of money in order to increase her department's activities. If she is able to pull it out, she will receive the credit for increasing sales, but if her department is not able to increase total sales even with a larger budget, it will be her responsibility.