1. If a manager is compensated based on performance vs. budget, would he be encouraged to report income earned in Yr. 1 only in Yr.2, if the performance in Yr. 2 is expected to be much higher (say) 120% of budget. What could he do to accomplish shifting the reporting period?

2. My company is inventing ways to ward off Corona Viruses in the future. My employees are either tech savvy and/or medical people. What would be the best budgeting approach to use - top down or decentralized. Why?

3. Would a service firm require use of a flexible budget? Why or why not? Give an example to back your answer.

4. Sandra is the manager of Sandra's Specialty Fashions that manufactures and sells to retail stores across Canada. After reviewing a monthly variance summary she notices:

a. A large favourable material price variance

b. A large unfavourable material quantity variance

c. A large unfavourable labor efficiency variance.

d. All other variances are small

Sandra's instinct is to give a reward to the purchasing manager with a substantial bonus and withhold the plant manager's monthly bonus until material quantity and labour efficiency variances improve.Required;

A .Should Sandra trust her initial gut feeling?

B. What scenario(s) other than good performance in purchasing and poor performance in manufacturing could lead to the same variances as those noted?

C. What should Sandra do to determine whether the purchasing manager's performance is especially good and the plant manager's performance is poor?

Q.5 - What should be included in the cost of a large Vegetarian Pizza from Sandra's Pizza?