when a company s actual results fall short of what was expected they have undercast that specific account an undercast situation is akin to budgetary slack and if undercasting occurs frequently the causes should be investigated 
undercasting could be a reflection of a cautious or conservative management team particularly if its market or the general economy is in a state of flux continuous undercasting is a problem for a company as it means it does not strongly understand the business environment or its operational processes and is ineffectively deploying its resources based on poor estimates it should also be determined if undercast estimates are a result of compensation motives for example if the bonuses paid to managers are linked to how well they outperform the budget estimates they may purposely undercast the budget thereby ensuring that the actual results are better than the estimates examples of undercasta steel manufacturer forecasts 3 billion in sales for the year however due to the imposition of tariffs to protect the domestic industry from foreign imports which increases domestic sales the company realized 3 5 billion in sales the undercast amount of 500 million was due to an unforeseen change in legislation that helped the business as another example the management team of a technology firm estimates that profits will be 50 million however they also know that their bonuses will be tied to beating the estimated profit number therefore in reporting its profit estimates the management team reports 35 million ensuring that the actual profits will beat the reported estimate this 15 million undercast was done on purpose in a dishonest way so that management could secure their bonus that is tied to performance 