One of the ways that functional-based accounting systems may inadvertently induce managers to act against the company's best interest is to
A) pass along defective parts to avoid an unfavorable materials usage variance
B) produce less units than demanded to avoid a labour efficiency variance
C) acquire materials in large quantities to avoid a favorable materials price variance
D) use more experienced workers to avoid a labour rate variance

Question

Quizplus · Accepted Answer

A functional-based accounting system focuses on measuring costs and variances related to specific functions or departments. This means that managers may be incentivized to prioritize their own department's performance over the overall performance of the company. In the case of option A, a manager may pass along defective parts to avoid an unfavorable materials usage variance, which would make their department's costs look better, but could result in poor-quality products and unhappy customers. This action goes against the best interest of the company as a whole.

One of the Ways That Functional-Based Accounting Systems May Inadvertently