For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purposes.
1. Analyzing whether to produce a component needed for the end product or to outsource it.
2. Deciding whether to compensate the sales force by straight commission or by salary.
3. Including costs related to administrative function to evaluate the financial performance of a division, but including only controllable costs in evaluating the manager’s performance.
4. Considering the desirability of purchasing new technology.
5. Basing bonus calculations on financial measures such as return on investment or basing bonus calculations on delivery time to customer.
6. Deciding whether to buy or lease an existing production facility to increase capacity.
7. Determining the loss in future business because of poor quality but including only estimated scrap and waste as potential loss on the budgeted financial statements.

  • CreatedMay 14, 2014
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