The correct answers are: The incidence of budgetary slack may increase; They often fail to provide a realistic performance target; They can cause managers to spend for the sake of it.

If managers know they are being judged against a single pre-set standard, they will be more inclined to build unnecessary expenditure - budgetary slack - into their budgets to provide a cushion against unforeseen circumstances.

Certain costs will vary with production. It will be misleading to call managers to account for costs being greater than budgeted, if the reason for the difference is greater than expected activity levels, and not failure to control costs.

Managers may spend up to budgetary limits even if the expenditure is unnecessary, in order to justify the original allocation or to guard against the possibility of having a reduced budget in a future period.

Preparing a fixed budget at one level will be simpler and less time consuming than preparing flexible budgets at a number of levels.