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weekly assignment week 12...

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Chapter 9: 9.16, 9.21,9.25, 9.40 Chapter 11: 11.2, 11.21

9.16) participative budgeting puts the responsibility on the employee therefore it helps motivates the employees as it boosts the morale of the employees. It also increases job satisfaction because they feel that the management put their trust on them and gives them important task which makes them feel important in the company. This also helps increases the job productivity of the employees as they are willing to put more effort to achieve the goals and target that they have set themselves to pay the trust the company gave them. However, participative budgeting is time-consuming for lower management, it involves a large number of people, therefore it will create more labour cost for the company. On the employee perspective, participative budgeting allows employees to easily achieve their target as they are the one who sets them at first place, it will therefore decreases the potential performance levels of the employees. 9.21) 1. Expected cash receipt : 60% (660,000) + 30%(390,000) + 8%(300,000) = $ 537,000 2. Expected cash payment : 98%(270,000) + 144,000 = $ 408,600 3. Expected cash balance : 220,000 + 537,000 – 408,600 = $ 348,400 9.25) 1) budgetary slack is the intentional underestimation or overestimation of the budgeted revenue or expenditure. This enables managers to make their numbers much more easily and is especially important if results and bonuses are related to the budget numbers . The negative consequences of budgetary slack are that it decreases the whole productivity as an organisation and it will ruined the whole and main objectives of the company. Another negative impacts budgetary slack has is that it may over or underestimate profits or revenue that will negatively affect other activities in the business. 2) Many companies follow the budget-based incentive system. The budget is set for each department and if the department outperform the budget they will get bonus and other incentives. However, for a personnel in the company to get such benefits, they would try to make unethical changes in the original budget and set the budget lower, so therefore they will get the bonus. 3) the bank could limit the number of managers who prepare the budgets to a few managers who aggressively want the bonus to reduce the slack in the budgeting. The bank also not use budget as the basis of performance measurements. 9.40 ) 11.2) flexible overhead budgets are mostly focused on the measure of input rather than the measure of output. Because input measures are more important indicators of production activities particularly when more than one heterogeneous product needs a different level of output or a usage. An input measure that would be appropriate in:

(a) an automated manufacturing environment is the number of machine hour (b) a labor-intensive manufacturing environment is the number of direct labor hours 11.21) (a) ($27 x the number of patient days) + 22 500 (b) Patient days 20,000 30,000

40,000

Variable electricity

27x 20,000 = 540,000

27x30,000= 810000

40,000x 27 = 1080000

Fixed electricity

22500

22500

22500

Total electricity

562500

832500

1102500...