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Revision question on budgetary slack and preparation of sales forecast.



“At times, subordination may try to play games and build in budgetary slack.” Horngren et al (2009).

REQUIRED:

  1. What is “budgetary slack” and describe two ways in which subordinates may attempt to create budgetary slack and state how senior managers may reduce the budgetary stack.
  2. Describe the possible reason why subordinates build in budgetary slacks when budgeting.
  1. “Firms with multinational operations face a variety of additional challenges in preparing their budgets.” Hilton (1999).

REQUIRED:
Describe briefly additional challenges in budgeting that are encountered by firms with multinational operations and how does management accountant address the challenge?

  1. “Sales forecasting is a critical step in budgeting process and it is very difficult to do accurately”; Hilton (1999)

REQUIRED:

    1. Describe factors that may be considered when preparing sales forecasts.
    2. Mention key problems that are faced in preparing the sales forecasts.

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