solve all question.

question 1

A.Muhammad, a new accounts manager at BBB Bank, has been asked to project how many new accounts he will open during 2018. Muhammad is paid a salary, plus a bonus of RM30 for every new account above the budgeted amount. The economy has been growing and the bank has experienced a 15% increase in the number of new accounts over each of the past five years. In 2017, the bank had 15,000 accounts. Thus, if the annual budget calls for 1,500 new accounts, and 1,620 new accounts are obtained, his bonus will be RM3,600 (120 excess of new accounts x RM30). Muhammad believes that the local economy will continue to grow at the same rate in 2017 as it has in recent years. He decided to submit a projection of 1,050 new accounts for 2018.

Required:

You have been hired by the BBB bank's CEO to make recommendations for improving the bank's operation. Write a memorandum to the CEO defining and explaining the negative consequences of budgetary slack. Also discuss the bank's bonus system for the new accounts manager and how the bonus program tends to encourage budgetary slack.

(10 marks)

QUESTION 2 (20 MARKS)

The Balanced Scorecard (BSC) is a means for measuring and managing all aspects of organizational performance. It is a set of measures that gives top management a fast but comprehensive view of the business and it translates mission and strategy into objectives and measures.

Many companies have realised that management of knowledge and the knowledge workers as a critical source of competitive edge than the traditional effective physical asset management. In the global knowledge economy, the creation, sustenance and the application of knowledge has become the key differentiator of success in an organization.

In view of this, the British Airways has implemented the BSC. The company has gathered the followings performance measures:

Earnings growth Percent empty seats

Return on invested capitalOn-time arrivals

Lost baggageEmployee turnover

Employee training hoursNumber of frequent flyers/customers

Required:

a.Discuss why do the measures used in a BSC differ from company to company?

(3 marks)

b.Briefly explain how a BSC can help to ensure the success of British Airways.

(3 marks)

c.Critically evaluate all the key perspectives of Balanced Scorecard. Match the performance measures given on the British Airways above to the four perspectives of BSC. The performance indicators may be used for more than one perspective.

(14 marks)

QUESTION 3 (20 MARKS)

Canggih Berhad is a manufacturer of infant furniture and the company is in the initial stage of preparing the annual budget for the year 2019. Bee, the management accountant has asked the sales team to prepare the sales estimates for their products. A common problem in budgeting is the tendency of people to pad budgets. The resulting budgetary slack makes the budget less useful because the padded budget does not present an accurate picture of the expected revenue and expenses.

It has been found that Ai, the Marketing Manager, has consistently understated 5% to 10% of his sales projection every year, just to give a little breathing room to his sales team. At the same time, he overstated at least 10% the amount of resources needed in his budget requests for his division, and that he was able to obtain the budget requested every year.

It is clear that Ai is engaging himself with the process of building slack into his budget or budgetary slack. Bee was very upset with Ai's behavior, but Ai continuously argued that everyone in the company who were involved in the budgeting process has done the same thing.

Required:

a.Define the term of budgetary slack. Explain how the budgetary slack can adversely affect

Ai's performance.

(6 marks)

b.Discuss how an organization would reduce the problems caused by the budgetary slack and how Canggih Berhad can reduce the amount of the slack into Ai's budget.

(6 marks)

c.As the management accountant of the company, Bee truly believes that Ai's behavior is unethical. Evaluate why the use of budgetary slack maybe an unethical practice in Canggih Berhad.

(4 marks)

question 4

Cantik Berhad is one the local manufacture of pottery products in Malaysia that sells its products to departmental stores in Asia Pacific region. The Management Accountant of Cantik Berhad is preparing its annual budget of 2021 and has asked the Sales Manager of the company to prepare the sales estimates for the year 2021. All members of the sales force have been asked to estimate sales in their territory for their products.

In the Budget 2021, it is found that the Sales Director uses the sales estimates to develop the target levels at which commissions begin. By using this formula specifically in calculating the commissions, the Sales Manager takes the sales estimate provided by the sales team, add 15% to it, and the result becomes the sales hurdle level for the sales team. If the actual sales of the team are less than the hurdle level, no commission will be paid. If the actual sales are above the hurdle level, then the commissions are paid at varying rates.

Required:

a.Define the term of budgetary slack.

(2 marks)

b.Elaborate how the budgetary slack can cause problems to Cantik Berhad. Discuss how it

can adversely affect the company's performance.

(6 marks)

c.Analyse what will be the behaviour of the sales force if they know the relationship between their estimates and the target level of sales.

(4 marks)

d.What is the likely consequence of basing the company's budgets on these estimates?

(3 marks)

e.If you were the Management Accountant in this company and were responsible for both reward system and budgeting system, what would you do?

(4 marks)

f.Explain how an organization would reduce the problems caused by the budgetary slack. Briefly discuss how Cantik Berhad can reduce the amount of slack into its budget.

(6 marks)

question 5

The Balanced Scorecard (BSC) is a means for measuring and managing all aspects of organizational performance. The Balanced Scorecard translates mission and strategy into objectives and measures. It is a set of measures that gives top management a fast but comprehensive view of the business.

In the global knowledge economy, the creation, sustenance and the application of knowledge has become the key differentiator of success in an organization. Many companies have realised that management of knowledge and the knowledge workers as a critical source of competitive edge than the traditional effective physical asset management.

Required:

a.Why do the measures used in a BSC differ from company to company?

(2 marks)

b.How does the Balanced Scorecard approach differ from traditional approaches of performance management?

(2 marks)

c.Explain why managers need a Balanced Scorecard to measure and manage intangible assets for value creation.

(4 marks)

d.Critically evaluate the important perspectives of Balanced Scorecard. In a strategy map, explain the cause-and effect linkages among these four perspectives.