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Answers to supplementary objective test questions

CHAPTER 5 – RESPONSIBILITY CENTRES

5.1 The responsibility centre run by manager A is an investment centre, manager
B runs a profit centre and manager C runs a cost centre.

5.2 D

A manager might build some slack into a budget to provide some ‘leeway’ to
disguise unnecessary spending.

5.3 C

Bottom-up budgets involve more participation from managers, therefore they
are more likely to motivate managers.

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