Consider the following statements about zero-base budgeting: I. The budget for virtually every activity in an organization is initially set to the level that existed during the previous year. II. The budget forces management to rethink each phase of an organization's operations before resources are allocated. III. To receive funding for the upcoming period, individual activities must be justified in terms of continued usefulness to the organization.

Which of the above statements is (are) true?

A. II only.

B. III only.

C. I and II.

D. II and III.

E. I, II, and III.

If a manager builds slack into a budget, how would that manager handle estimates of revenues and expenses? Revenues Expenses

A.Underestimate Underestimate

B.Underestimate Overestimate

C.Overestimate Underestimate

D.Overestimate Overestimate

E.Estimate correctly Estimate correctly