Acc613

P6-7

A: The different between operation profits and budget is due to the reduced cart rentals from 6000 to 4000. When the variances are calculated based on the flexible budget, $1,100 unfavorable variance. The $200 unfavorable variance in labor is insignificant and the $900 gas and oil difference is maybe timing difference between when the gas an oil are purchased and actually used.

B: Advantage: the controller`s flexible budget scheme is that it separates those items Can control from those he can`t control. The flexible budget are adjusted for volume effects.

Disadvantage: because the remove volume effects from variances, he has no incentive to worry about cart rentals.

C: Green receives the benefits of closing the courses to golf carts but she does not bear the full costs of this action. Meanwhile, Because of wetness, Green keeps that course looking good and does not have to repair cart damage. So I suggest Golf world do not change its policy right now.

P6-24

A:

1 Generates collection of specific knowledge about market, products, industry

2 encourage value-maximization

3 stimulates sharing of specialized knowledge across managers

4 not evaluate based on budget reduce incentives to estimates

5 forces managers to do short and long run.

Weakness:

1 Comparability across subsidiaries difficult

2 very time consuming for senior and corporate management.

B: Depend on the illustrate the preceding point, elementary schools hold school dances for 11 and 12 year olds. The boys are on one side of the room and the girls on the other. To get the boys and girls to dance, the boys would be placed in one line and the girls in a second line and then the two lines would be paired up and dance partners assigned. In order to encourage people to share knowledge, very little weight should be placed on using budgets as a performance evaluation scheme.

P6-25

A:

| FC | VC | TC | |

Revenue | | | | 960,000 |

Grape | 240000 | 2.1 | 256800 | |

Labor | 75000...