When governments reduce their funding to hospitals and universities, often the executives respond with a demand for an equal percentage reduction in costs by all business functions. Is this the best strategic approach?

A. Equal or across-the-board reductions is a strategy that equalizes reduction in costs by all business functions making it much fairer for all.

B. Equal or across-the-board reductions is a strategy that rewards honest business functions and penalizes those that pad the budgets. The strategy produces a perverse incentive, rewarding the overstatement of budgeted costs and the understatement of budgeted revenue.

C. Equal or across-the-board reductions is a strategy that penalizes honest business functions and rewards those that pad the budgets. The strategy produces a perverse incentive, rewarding the overstatement of budgeted costs and the understatement of budgeted revenue.

D. None of the above is the correct answer.