be based on current costs, which are objective and verifiable. Therefore, product costs are not useful for and relevant to our decision. making process for the future operational plan. Especially, our business is small. We donr need to implernent a cornprehensive prodict costing system." Required As a future management accountant, what is your response to the above comment? Do you agree or disagree with each of the above (comments)? Explain your position in detail and provide suitable examples. [10 marks] Part 2. Planning or budgeting is one of the main functions of managernent accounting. Howevec, the budgeting process also involves and has impact on employees' behaviours. Christina Lim has been concerned about these issues during her tenure as a chief director at ABC shoes producer. The company uses a participative budgeting process during which various department managers (in administration, marketing, production, sale) are required to propose a cost or revenue target for their departmental operation. For many years, Christina usually adjusts the proposed targets by 10% and these adjusted targets become the operation or production budgets for the respective departments. Bonus scheme of the department managers depends on whether they can achieve their operation (or production) budget. Required: a. Based on your knowledge of the participative budgeting process, explain any incentive that the department managers might have to be Bishonest with Christina about the operation or production level they think their department can achieve. [5 marks] b. List and discuss possible impacts that the department managers inaccurate operation or production estimates could have on other company departments or employees. [5 marks] c. Suggest what should be done to prevent a manager from providing inaccurate budgets which can easily achieved. [5 morks]