Tutorial 5 BB Solutions PDF

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Tutorial 5 BB Solutions...

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AYB321 Strategic Management Accounting -Tutorial 5: Budgeting Solutions Question 1 - Review Question 9-2: A budget may facilitate the allocation of scarce resources by creating a forum in which the competing uses of resources can be debated and evaluated and different scenarios can be modelled.

Question 2: Review Question 9-3: A budget can be used to evaluate performance by comparing the actual results to the budget. This can be used to assess the performance of individuals, departments, divisions and the overall company.

Question 3 – Review Question 9-18: Setting more challenging targets will not always result in improved performance as setting targets at unachievable levels may demotivate managers.

Question 4 - Exercise 9-25: Budgetary slack is the difference between the revenue or cost that a person provides and a realistic estimate of the revenue or cost. The bank’s bonus system for the new accounts manager may encourage budgetary slack; therefore they should consider some alternative measures for balancing the dysfunctional aspects encouraged by the current system.

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