Rainbow Inc. recently appointed Margaret Joyce as vice president of finance and asked her to design a new budgeting system. Joyce has changed to a monthly budgeting system by dividing the companys annual budget by twelve. Joyce then prepared monthly budgets for each department and asked the managers to submit monthly reports comparing actual to budget. A sample monthly report for Department A is shown below.

RAINBOW INC. Monthly Report for Department A
	Actual	Budget	Variance
Units	1,000	900	100F
Variable production costs
Direct material	$2,800	$2,700	$100U
Direct labor	4,800	4,500	300U
Variable factory overhead	4,250	4,050	200U
Fixed costs
Depreciation	3,000	2,700	300U
Taxes	1,000	900	110U
Insurance	1,500	1,350	150U
Administration	1,100	990	110U
Marketing	1,000	900	100U
Total costs	$19,450	$18,090	$1,360U

This monthly budget has been imposed from the top and will create behavior problems. All of the following are causes of such problems except

a. the use of a flexible budget rather than a fixed budget.

b. top management authoritarian attitude toward the budget process.

c. the inclusion of non-controllable costs such as depreciation.

d. the lack of consideration for factors such as seasonality.