978-0137024971 Chapter 9 Part 1

Chapter 9: Behavioral and Organizational Issues in Management Accounting and Control Systems

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Chapter 9

Behavioral and

Organizational Issues

in Management

Accounting and

Control Systems

QUESTIONS

9-1 In the context of a management accounting and control system, control refers

organizational objectives.

9-2 The four stages that are needed to keep the organization in control are:

the objectives were met;

2. Do: implement the plan;

prescribe corrective action;

4. Act: take appropriate actions to return the system to an in-control state.

9-3 The two broad technical considerations that designers of management

9-4 When addressing the relevance of a MACS, designers should develop a system

that provides information that is timely and accurate enough to be relevant and

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management accounting information do not conflict within various parts of the

organization. Finally, employees should be able to use the system’s available

hand.

9-5 The four major behavioral considerations in MACS design are: (1) embedding

decision making and MACS design, and (4) developing an appropriate

incentive system to reward performance.

9-6 The scientific management view of motivation is that most people find work

down tasks so employees need only focus on production, not decision making.

9-7 The human relations movement view of motivation is that people have needs

discretion at their jobs. Management’s task is to develop a better working

satisfaction, and performance.

9-8 The human resources model of motivation view is that people do not find

creative, responsible, and wish to improve the organization. The task for

blossom.

9-9 There are a number of choices that individuals can make when ethical conflicts

the organization to change the discrepancy, go outside the organization

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9-10 An ethical control system is a system that promotes ethical decision making in

an organization. Key elements include the following:

as part of every performance review.

 Adequate training to help employees identify ethical dilemmas in

practice and learn how to deal with the dilemmas.

 Compelling evidence that senior management expects organization

and provide a private line of communication from employees directly to

the chief executive officer, chief operating officer, head of human

resource management or board of directors.

control system.

9-11 The three key dimensions of motivation are: direction, the tasks on which an

a task.

9-13 Managers use diagnostic control systems to monitor organizational outcomes

among managers and subordinates about data generated by the system and

9-14 Task control is the process of finding ways to control human behavior so a job

is completed in a prespecified manner. Results control focuses on measuring

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and comparing employee performance against stated objectives. Task control is

most appropriate when there are legal or safety requirements, when employees

with sound decisions and actions. In addition, the performance measurement

system should be designed to assess individual contributions, to provide

suitable motivation.

9-15 The two categories in task control are preventive control and monitoring. In

they are performing a task.

9-16 Quantitative financial measures of performance in a manufacturing

organization include:

9-17 Quantitative financial measures in a service organization include:

 cost of service

9-18 Quantitative nonfinancial measures of performance in a manufacturing

organization include:

 yield rate

 quality

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9-19 Quantitative nonfinancial measures of performance in a service organization

include:

 number of customer complaints (in a restaurant)

instance).

9-20 Qualitative measures of performance include:

 image of a product

9-21 Gaming a performance indicator occurs when an individual alters his or her

acts.

9-22 Data falsification occurs when an individual falsifies information in favor of

9-23 The single most important factor in making major changes to an organization is

9-24 Earnings management occurs when managers knowingly manipulate reported

9-25 Empowering employees in MACS design requires two essential elements—

Atkinson, Solutions Manual t/a Management Accounting, 6E

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9-26 The two interrelated behavioral issues are (1) designing the budget process,

the budget to their own ends.

9-27 The three most common methods of setting a budget are: (1) authoritative

subordinates and (3) consultative budgeting in which a superior asks

budget alone.

9-28 Research has shown that the most motivating type of budget is one that is

9-29 A stretch target is one that exceeds a previous target by a significant amount

9-30 Budget slack occurs when subordinates (a) ask for excess resources (more than

9-31 An intrinsic reward is a benefit that a person experiences, without the

9-32 An extrinsic reward is a reward that one person provides to another person in

9-33 Incentive compensation is a monetary reward that is based on measured

9-34 The six attributes of effective performance measurement systems are: (1) the

person must understand the job and the reward system, and believe that the

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9-35 Organizations where employees have been given the responsibility to make

can affect the organization’s outcomes.

9-37 Profit sharing is a cash bonus incentive compensation plan where the total of

9-38 Gain sharing is a cash bonus incentive compensation plan where the total of all

performance relative to some target.

9-39 In a stock option plan, employees deemed to be able to affect the value of an

is issued.

EXERCISES

9-40 The mission statement becomes a basis for the organization’s accountability to

those stakeholders. The notion “company’s value” is ambiguous—perhaps

working conditions, and security; by shareholders—a competitive rate of return on

investment; and by society—conformance to laws and progressive social activities,

such as affirmative action.

9-41 When addressing the relevancy of a management accounting and control

system, designers should develop a system that provides information that is

evaluations or decisions are made is irrelevant with respect to those evaluations

Atkinson, Solutions Manual t/a Management Accounting, 6E

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makes it more difficult to understand and compare results across divisions. If

one division of an organization uses activity-based costing principles and

customized for the decisions at hand. If the management accounting and

control system cannot accommodate the specialized needs of each major user,

organization.

9-42 The scientific management view of motivation sees employees as the vehicles

by which management’s goals can be accomplished. People are thought of as

The human relations school understands that employees want much more from

The human resources view goes even further than the human relations school in

that employees are seen as key suppliers of ideas and information about how

knowledge about their jobs, and to be highly creative, ethical, responsible, and

supportive of change in their organizations. The task for management is to

9-43 The hierarchy of ethical considerations are (1) legal rules—actions prohibited

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9-44 If the organization’s code of ethics is stronger than the individual’s, then the

organization’s, the individual can quit, do nothing and try to live with the

and discussions and list the parties involved.

9-45 First, the individual must make sure that the facts are correct and that there is

clearly a conflict. The individual should speak to superiors and determine

organization), (4) work with organizational leaders to resolve the problem, (5)

go outside the organization to publicly resolve the issue, (6) go outside the

be appropriate depending on the circumstances.

The organization’s stated values may conflict with practiced values if

high ethical standards.

9-46 Any control situation is useful here. The exercise is intended to provide an

device that prevents the vehicle from being started unless the driver can

preventive control.

9-47 Many aspects of work require a variety of actions and decisions, and using only

one measure of performance will not capture the complexity of the employee’s

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the system not only provides no direct motivation to the employee, who

receives no personal benefit in pursuing unmeasured performance goals, but

courtesy are unimportant.

9-48 What performance is measured, how it is measured, and what rewards follow

results in increased rewards and personal satisfaction.

9-49 If the performance measurement system includes factors beyond the

9-50 The president, who controls overall policy and sets the organization’s direction,

should be evaluated and rewarded based on the trend of key success factors

include: the time between when an order is taken and when it is filled, the cost

of filling an order, overall system accuracy, and the performance of this system