1. Why should budgetary slack be squeezed out of a budget? 2. Can budgetary slack result in the company not achieving its long range goals? 3. What happens to net income, net cash flow and borrowing needs if everybody puts some budgetary slack in the budget? Can employees lose their jobs as an outcome of budgetary slack?
- Why should budgetary slack be squeezed out of a budget?
Answer:
budgetary slack be squeezed out of a budget because decreases ability for highlighting weaknesses & take timely corrective actions for problem areas. budgetary slack decreases overall effectiveness of company planning that is why budgetary slack be squeezed out of a budget
- Can budgetary slack result in the company not achieving its long range goals?
Answer: Yes, it is possible that budgetary slack result in the company not achieving its long range goals because budgetary slack under-estimation the budgeted revenue or expenses or other variance which allows managers better chance for making their numbers for short run and which is not helpful in the long run
- What happens to net income, net cash flow and borrowing needs if everybody puts some budgetary slack in the budget? Can employees lose their jobs as an outcome of budgetary slack?
answer:
budgetary slack decreases overall effectiveness of company planning. Such Unnecessary actions for reduces promotional spending, pricing changes may be taken from the perceived need for improving earning
In budgetary slack employees have incentive for meet budget goals and they are set quite low. In case of budgetary slack for many consecutive years, organization may find that overall performance of the company has declined in with compare to more aggressive competitions
Thus, the budgetary slack may have a long-term negative impact on the profitability and competitive positioning of a business or employees lose their jobs as an outcome of budgetary slack
