Question
The Omega Division of Alpha Corporation has been allocated $4 million for capital spending but has identified $4.6 million in positive NPV projects. Omega's manager thinks he can convince the company to fund the additional $0.6 million dollars because Omega uses Blank______ rationing to control overall spending.
Multiple choice question.
hard
soft
exceptional
food
Multiple choice question.
hard
soft
exceptional
food
Answers
GPT-4o mini
The correct answer is **soft**.
In the context of capital budgeting, "soft" rationing refers to a situation where a division or department has a budget constraint but may have some flexibility to receive additional funding if it can demonstrate the value of its projects. This is in contrast to "hard" rationing, where funding is strictly limited and cannot be exceeded regardless of project viability.
In the context of capital budgeting, "soft" rationing refers to a situation where a division or department has a budget constraint but may have some flexibility to receive additional funding if it can demonstrate the value of its projects. This is in contrast to "hard" rationing, where funding is strictly limited and cannot be exceeded regardless of project viability.