Responsibility and controllability. Consider each of the following independent situations:

1. A very successful salesman at Amcorp Computers regularly ignores the published sales catalog and offers lowered prices to his customers in order to close sales. The VP of sales notices that revenues are substantially lower than budgeted.

2. Every “special deal” offered to a customer by any salesperson at Amcorp Computers has to be cleared by the VP of sales. Revenues for the second quarter have been lower than budgeted.

3. The shipping department of Amcorp has limited capacity, and sales orders are being cancelled by customers because of delays in delivery. Revenues for the past month have been lower than budgeted.

4. At Planetel Corp., a manufacturer of telecommunications equipment, the production supervisor notices that a significantly larger number of direct manufacturing labor-hours were used than had been budgeted. Investigation revealed that it was due to a decline in educational standards required by the Human Resources department when it interviewed applicants for hourly production jobs six months earlier.

5. At Planetel Corp., a relatively new production supervisor finds that more direct manufacturing labor- hours were used than had been budgeted. Interviews revealed that workers were unhappy with the supervisor’s management style and were intentionally working slowly and inefficiently.

6. At Planetel Corp., the production supervisor traces the excessive consumption of direct materials (relative to the budget) to the fact that waste was high on machines that had not been properly maintained.