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| Gleason Company, a manufacturer of children's toys and furniture, is beginning budget preparation for next year. Jack Tiger, a recent addition to the accounting staff at Gleason, is questioning Leslie Robbins and James Crowe, sales and production managers, to learn about Gleason's budget process. Crowe says that he incorporates Robbins's sales projections when estimating closing inventories, but that the resulting numbers aren't completely reliable because Robbins makes some "adjustments" to her projections. Robbins admits that she does, indeed, lower initial sales projections by 5% to 10% to give her department some breathing room. Crowe admits that his department makes adjustments not unlike Robbins's; specifically, production adds about 10% to its estimates. "I think everyone here does something similar," he says, and Robbins nods assent. Questions A. What benefits do Robbins and Crowe expect to realize from their budgetary practices? B. What are possible adverse effects of introducing budgetary slack for Robbins and Crowe? |