Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Group Discussion EXERCISE 16.8 Design of Management Accounting Systems L016-10 Sheila Lufty manages the plant that produces dining room furniture for Bastile Furniture Company. Sheila's

image text in transcribed
Group Discussion EXERCISE 16.8 Design of Management Accounting Systems L016-10 Sheila Lufty manages the plant that produces dining room furniture for Bastile Furniture Company. Sheila's annual performance is evaluated based on how well she manages all the costs incurred to run the plant and produce the furniture. For her annual evaluation, the costs incurred for the year are compared to the budgeted costs that were established at the beginning of the year. Sheila receives a large bonus if the total costs are less than those budgeted at the beginning of the year. Recently, Sheila provided the following end-of-year explanation to her boss, the division head, Rose Pantie: Rose. I know that the plant costs were over budget again this year. However, during the year I only receive four reports from accounting about the plant costs. These quarterly reports from accounting tell me what the actual plant costs are each quarter. Because the budget is based on yearly totals, it is difficult to tell from the accounting reports if we are falling behind budget. In addition, the sales department decides how many sets of dining room furniture we will produce during the year. This year, sales demanded 1.000 more dining room sets than budgeted at the beginning of the year. These extra sets increased the plant costs significantly. On the basis of the three principles of management accounting system design discussed in this chapter identify three problems with Bastile Furniture Company's management accounting system. What would you recommend that Bastile do to fix the problems? (Hint: The three principles of Management Accounting are 1. Assigning Decision-Making, 2.Aiding Decision Making, 3. Assisting in Performance Evaluation & Rewards) (see pp.724-725 in the text). Group Discussion EXERCISE 16.8 Design of Management Accounting Systems L016-10 Sheila Lufty manages the plant that produces dining room furniture for Bastile Furniture Company. Sheila's annual performance is evaluated based on how well she manages all the costs incurred to run the plant and produce the furniture. For her annual evaluation, the costs incurred for the year are compared to the budgeted costs that were established at the beginning of the year. Sheila receives a large bonus if the total costs are less than those budgeted at the beginning of the year. Recently, Sheila provided the following end-of-year explanation to her boss, the division head, Rose Pantie: Rose. I know that the plant costs were over budget again this year. However, during the year I only receive four reports from accounting about the plant costs. These quarterly reports from accounting tell me what the actual plant costs are each quarter. Because the budget is based on yearly totals, it is difficult to tell from the accounting reports if we are falling behind budget. In addition, the sales department decides how many sets of dining room furniture we will produce during the year. This year, sales demanded 1.000 more dining room sets than budgeted at the beginning of the year. These extra sets increased the plant costs significantly. On the basis of the three principles of management accounting system design discussed in this chapter identify three problems with Bastile Furniture Company's management accounting system. What would you recommend that Bastile do to fix the problems? (Hint: The three principles of Management Accounting are 1. Assigning Decision-Making, 2.Aiding Decision Making, 3. Assisting in Performance Evaluation & Rewards) (see pp.724-725 in the text)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistics For Economics Accounting And Business Studies

Authors: Michael Barrow

7th Edition

1292118709, 978-1292118703

More Books

Students also viewed these Accounting questions

Question

Discuss essential concepts of family therapy.

Answered: 1 week ago

Question

=+3. List the touchpoints where you'd reach your audience.

Answered: 1 week ago