Discussion

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C-11: The CEO of Pride Company argued that a conventional flexible budget or activity-based flexible budget is the latest trend in budgeting and therefore the company should adopt either one. Do you agree with this reasoning? How would you explain to the CEO when and when not to use conventional flexible budget and activity-based flexible budget? Further what would you tell the CEO if he asked you which one is better? (300 words).

C-12: As the management accountant of Pride Company, you are tasks to inform the manager when their actions are congruent (or not) with the company goal? Additionally, you are also asked that you utilize responsibility-accounting in explaining how to achieve goal congruence. How will proceed with this explanation that the managers can understand. (300 words).


Also, need two replies 200 words each for each Disc ussion........


Reply 1,2:

C-11: Conventional flexible budget vs Activity-based flexible budget

I agree with the Pride Company CEO's reasoning regarding both conventional and activity-based flexible budget because many managerial accountants use either of the methods to prepare budgets and determine the overhead costs associated with business operations in a more accurate manner. The conventional flexible budgets based on a single cost driver. In the flexible budget, the costs grouped into fixed or variable. Here, costs will vary under variable cost group with respect to single cost driver or volume measures such as machine hours or direct labour hours.

On the other hand, Activity-based flexible budgets are advancements on the traditional/convention flexible budgets. When a budget is prepared based on an activity-based flexible budget approach, multiple cost drivers are used to defining each cost's nature in the flexible budget. This budget process is more accurate than the conventional flexible budget because the expenses that grouped as fixed on a traditional budget become vary when many cost drivers used, and they are used to determine the overhead costs' behaviour. The cost remains fixed relative to units and changes with respect to the cost drivers in the budget (Hansen, Mowen, & Heitger, 2021). The activity-based flexible budgets are appropriate when cost deviations/variations come from the cost drivers rather than output units.

Currently, many managerial accountants and companies are using flexible budgets. Most firms and accountants prefer to use activity-based flexible budgets because they remain synchronized with reality and give more accurate and definite cost information to the managerial accountants. In the current ever-changing business environment, the business performance shows a variance from the anticipated performance; business operations remains more complex due to many sub-activities. Because of such situations, many organizations are using activity-based flexible budgets (Hilton, 2011). Hence, I would like to recommend the CEO of Pride Company use an activity-based flexible budget. However, it requires more cost to implement and maintain compared to the conventional flexible budget and consume more time. This flexible budget needs more assumptions and insights from the organization management; on such occasions, it results in budgets inaccuracies.

C-12: Responsibility-accounting for goal congruence

Considering the organization structure and business operations of various departments of the Pride Company, each department's managers are not congruent because they are mainly concerned with their departmental goals and objectives. This situation would lead to failure in achieving the general goals of the firm. So, it is essential to achieve a common purpose and a shared vision of the organization.

Goal congruence is a situation in which various organization members and all business departments share a common goal. A well-planned design of an organization causes goal congruence that results in a firm working as a team to meet its goals. The company needs to achieve success in the current competitive business world because if a unit or a division of the firm works only for achieving its goals and objectives, it becomes difficult for the business to achieve its significant goals (Patel, 2013). Also, it leads to competition between the departments in the firm that minimize overall revenues and maximize expenses. So, goal congruence makes everyone at the business work together to achieve its common goals.

            However, achieving goal congruence is not that simple for an organization. It requires a proper organization structure, and the business must use a responsibility-accounting approach. This approach plays a significant role in achieving the goal congruence among all departments of the firm. It refers to an accounting system that helps track each division's performance in line with the organization's need and helps monitor their performance. Implementing a responsibility-accounting system will bring a sense of accountability and responsibility among all departments and sub-divisions and their employees. It assists in implementing an effective and efficient performance review system at the organization level and measures the firm's performance. Also, it helps the business in tacking corrective actions for the deviation in business operations. The system segregates all departments' work into cost, profit, revenue, and investments centres to make them accountable for their work (Atu, Endurance, Sunny, & Ozele, 2014). Then, the system will design the company's structure such that every individual employee or employer of the firm equally responsible for achieving the goal congruence.

References

Atu, O.-E. O., Endurance, O., Sunny, A. I., & Ozele, C. (2014). Responsibility Accounting: An Overview. IOSR Journal of Business and Management, 16(1), 73-79. doi:10.9790/487X-16147379

Hansen, D. R., Mowen, M. M., & Heitger, D. L. (2021). Cost Management (Fifth ed.). Boston, MA: Cengage Learning.

Hilton, R. W. (2011). Managerial Accounting: Creating Value In a Dynamic Business Environment (9 ed.). New York: McGraw-Hill Companies, Inc.

Patel, A. T. (2013). Responsibility Accounting: A Study in Theory and Practice. Indian Journal of Applied Research, 3(3), 1-2.


Reply 3,4:

Chapter-11

For instance, in an ideal world, a person would use a Flexible Budget to make a financial decision. However, for financial decisions like making a mortgage payment and for life decisions such as taking time off from work or deciding on retirement, it makes more sense to use a traditional budget. The first purpose of the Conventional Flexible Budget is to assist taxpayers with their budgeting problems. However, if one chooses to use it in conjunction with other budgeting tools or guidelines, its primary purpose is to help collect taxes and other income. It allows for collecting tax-exempt property, which provides taxpayers with a way to keep the proper amount in their tax-exempt budget (Zimmerman, 2017).

The use of a conventionally-flexible budget is twofold. First, since the budget is a set of objectives, using a conventionally-flexible budget could encourage more spending, such as in-year budget increases and an increase in the annual rate of pay. Second, since the budget is a set of objectives, the use of a conventionally-flexible budget could be expected to force the individual to reduce income for purposes of meeting a more specific budget target than he or she has undertaken. These two uses of conventionally-flexible budgets are different, but these are both equally important (Zimmerman, 2017).

While the conventional method of budgeting is not designed to achieve the country's full fiscal sustainability, the conventional approach is well suited for the economic activity and development activities of a country. While the traditional method is only one of several methods of calculating the country's economic and fiscal stability, it helps planning and forecasting. For instance, in planning for the country's financial management and economic activity, the primary consideration is to create fiscal space, such as an appropriate level of public spending and an appropriate level of private consumption expenditure, which can ensure a high consumption level and growth. Also, the fiscal space is used to achieve the country's current financial balance and potential growth, which is achieved through a reduction in public debt to private finance, and a rise in debt ratio number of debt-to-income ratios. Thus, the conventional method's focus is to create more fiscal space to ensure stability and increase economic activity in the country (Zimmerman, 2017).

Chapter-12

In a word will be the management's ability to keep up their standards, keep up their standards, keep up their standards to get them to a state to a goal, and get results on time to the shareholders in the way that it should. The manager acts according to the company goal, which is to deliver value in a particular way. In this case, the company intends to grow as we improve the products offered by GCP. The manager acts in this manner, considers the company's goals, and is willing to work with its leaders to attain these goals. The manager provides the company some guidance and guidance on how to achieve the company's goals. If the manager is not available to help the company accomplish its goals, the manager takes responsibility for the outcome. The manager is a leader in a group and can be a buddy between the group. The manager is more of an advisor who helps out the group through the group, and it is overall success to make the group work harder at what they believe is required. The manager helps the group develop its products and services, and as a result, the management group will help grow the business. These actions become positive reinforcement from the group manager to help others contribute to growing the business (Zimmerman, 2017).

There is a strong reason why it makes more sense to have responsibility-accounting as the basis of decision-making in the future than as the foundation of the current set of decisions- and that has nothing to do with the actual implementation of responsibility-accounting, which is the foundation of responsibility-accounting, the foundation of responsibility-accounting in today's world (Zimmerman, 2017).

The idea behind Responsibility-Accounting is that any organization whose responsibility arises from or is the result of its organization are held accountable for their actions. The more specific, the better. If the organization is a business, it may be accountable to its customers for its business decision to add a product to its product inventory list or be accountable to its customers for its shipping costs. If the organization is an individual, its activities may be accountable to its shareholders, employees, or other shareholders. Any business that is responsible for other businesses to which it contributes may be held accountable, too (Zimmerman, 2017).

Reference

Zimmerman, J. L. (2017).  Accounting for decision making and control (9th ed.). New York, NY:  McGraw-Hill Education.

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