Which of the following statements about budgeting and motivation are true?
(1) A target is more motivating than no target at all
(2) The problem with a target is setting an appropriate degree of difficulty
(3) Employees who are challenged tend to withdraw their commitment
It is generally agreed that the existence of some form of target or expected outcome is a greater motivation than no target at all. Therefore (1) is true. The establishment of a target, however, raises the question of the degree of difficulty or challenge of the target. Therefore (2) is true. If the performance standard is set too high or too low sub-optimal performance could be the result.
The degree of budget difficulty is not easy to establish. It is influenced by the nature of the task, the organisational culture and personality factors. Some people respond positively to a difficult target. Others, if challenged, tend to withdraw their commitment. So (3) is not true.
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The following statements have been made about material price planning variances:
(1) The publication of material price planning variances should always lead to automatic updates of standard costs.
(2) The causes of material price planning variances do not need to be investigated by managers at any level in the organisation.
Which of the above statement(s) is/are true?
Leaf limited has had a mixed year. Its market share has improved two percentage points to 20% but the overall market had contracted by 5% in the same period. The budgeted sales were 504,000 units and standard contribution was $12 per unit.
What is the level of actual sales?
The finance director of Paint Mixers Ltd has produced the table below showing the variance results for the first three months of the year:
January February March
Material price variance $3,000 A $2,000 A $1,000 A
Material mix variance $2,000 A $750 A $100 F
Material yield variance $4,000 A $2,000 A $50F
Which of the following interpretations of the variances analysis exercise above is NOT correct?
The following statements have been made in relation to the use of standard costs in rapidly changing environments:
(1) Variance analysis results will take into account important criteria such as customer satisfaction or quality of production.
(2) Achieving standards is suitable in most modern manufacturing environments.
Which of the above statement(s) is/are true?
The following statements have been made about planning and control as described in the three tiers of Robert Anthony’ s decision-making hierarchy:
(1) Strategic planning is concerned with making decisions about the efficient and effective use of existing resources.
(2) Operational control is about ensuring that specific tasks are carried out efficiently and effectively.
Which of the above statements is/are true?
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