1. Budgets should not be used to motivate and reward employees. 2. Budgets play an important communication role within organizations. They provide a mechanism for managers to share expectations and priorities for the future. 3. Budgets also provide useful benchmarks for evaluating and rewarding employee performance.

1. Budgets should not be used to motivate and reward employees. 2. Budgets play an important communication role within organizations. They provide a mechanism for managers to share expectations and priorities for the future. 3. Budgets also provide useful benchmarks for evaluating and rewarding employee performance.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 2DQ: Briefly describe the type of human behavior problems that might arise if budget goals are set too...

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Which of the following statements are TRUE? I. Responsibility accounting attempts to assign blame for problems to a specific manager.II. One benefit of a budget is that it helps managers gather relevant information for improving future performance.III. Challenging budgets tend to motivate improved performance.IV. Controllability may be difficult to pinpoint because some costs are the result of the market, not the manager.
Which of the following statements are TRUE? 1. Responsibility accounting attempts to assign blame for problems to a specific manager. 11. One benefit of a budget is that it helps managers gather relevant information for improving future performance. III. Challenging budgets tend to motivate improved performance. IV. Controllability may be difficult to pinpoint because some costs are the result of the market, not the manager. a) I, III, and IV are true. b) I and IV are true c) II, III, and IV aregrue. d) All statements are true
Which of the following is not a benefit of budgeting? O Provide a way to measure business performance Help managers communicate expectations and quickly. spot deviations Keep managers focussed on financial implications of their business decisions O Provide a way to hire specialized labors
Which of the following is not an advantage of budgeting? a) Forces managers to planb) Provides information for decision makingc) Guarantees an improvement in organizational efficiencyd) Provides a standard for performance evaluatione) Improves communication and co-ordination
Which one of the following best describes the role of top management in budgeting process? Top management Should be involved only in the approval process Lacks the detailed knowledge of the daily operations and should limit its involvement Needs to be involved, including using the budget process to communicate goals Needs to separate the budgeting process and the business planning process into two separate processes
4. The following are characteristics of an effective budget, EXCEPT: A. Goals should be attainable. В. Evaluations should be made carefully with opportunities to explain any failures. С. They should be properly applied to avoid negative effects. D. Customers affected by a budget should be consulted when it is prepared.
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following situations will likely lead to human behavior problems? a. allowing employees the opportunity to be a part of the budget process b. setting goals too loosely, creating a budgetary slack c. setting goals that are consistent across the firm d. setting goals that are reasonable and attainable
(3) Explain the ethical considerations as it relates to using budgets as a basis for rewarding managers? (4)Explain three specific benefits that a system of budgetary planning and control may bring to an organization.
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem? Allowing employees the opportunity to be a part of the budget process Allowing goals to be so low that employees develop a "spend it or lose it" attitude Setting goals too tightly making it difficult to meet performance expectation Setting goals among managers that conflict with one another
Which one of the following is not considered to be a benefit of participative budgeting? When managers set the final targets for the budget, top management need not be concerned with the overall profitability of current operations. Managers are more motivated to reach the budget goals because they participated in setting them. Individuals at all organizational levels are recognized as being part of the team; this results in greater support of the organization. The budget estimates are prepared by those in direct contact with various activities.
The best that describes the top management's role in budgeting process is that top management 1. Should be involved only in the approval process 2. Lacks the detailed knowledge of the daily operations and should limit their involvement 3. Needs to be involved, including using the budget process to communicate goals 4. Needs to separate the budgeting process and business planning process into two separate processes O 1 O 2 3. O 4
Management accountants must try to implement systems that are acceptable to budget stakeholders to produce positive effects. Now, as a management accountant, choose three (3) negative attitudes, explain them and write yourr ecommendations on how you will address these negative attitudes from a management’s perspective. It couldi ether be a policy that the management will implement or an action that will be undertaken by management to counteract the negative attitude.