Question 1

________ occur(s)when subordinates ask for excess resources above and beyond what they need to accomplish budget objectives.

Accepted Answer

Budget slack occurs when subordinates intentionally ask for more resources than necessary in order to create a buffer in case unexpected events occur or to increase the likelihood of their department meeting budget targets. This can be problematic as it leads to an inefficient use of resources and can ultimately harm the organization's overall performance.

Question 2

The BEST description of participative budgeting is that:

Accepted Answer

Participative budgeting involves managers and employees at many levels being involved with the budgeting process, which encourages collaboration and input from various perspectives. This is in contrast to the traditional approach where top management sets figures for all operating activities without seeking input from lower-level managers and employees. Therefore, option B is the best choice as it accurately describes participative budgeting.

Question 3

Gain sharing is a system for distributing cash bonuses from a pool when the total amount available is a function of performance relative to some target.

Accepted Answer

Gain sharing involves distributing cash bonuses from a pre-defined pool based on how well an organization has performed relative to some set target.

Question 4

Management accounting must gather relevant and reliable performance information to administer intrinsic rewards.

Accepted Answer

Management accounting must gather relevant and reliable performance information to administer extrinsic rewards.

Question 5

________ occur(s)when managers ask subordinates to discuss their ideas about the budget,but no joint decision-making occurs.

Accepted Answer

Consultative budgeting occurs when managers ask subordinates for their input and ideas about the budget, but ultimately the decision-making power resides with the manager. This approach is less authoritarian than authoritative budgeting but still does not allow for joint decision-making. Stretch targets are a form of setting ambitious goals for the budget, while budget slack involves padding the budget with extra money in case of unexpected expenses.

Question 6

Profit sharing rewards short-term performance while stock options attempt to reward long-term performance.

Accepted Answer

Profit sharing is a form of compensation where employees receive a portion of the company's profits, typically distributed annually or quarterly. This type of incentive program is designed to reward short-term performance as it is directly tied to the company's profitability in the immediate term. On the other hand, stock options give employees the right to purchase company stock at a specified price after a certain period of time has passed. This type of incentive program is intended to reward long-term performance, as the value of the stock will likely increase over time as the company grows and becomes more successful.

Question 7

An incentive-based reward system is only effective if employees understand how to improve their measured performance.

Accepted Answer

An incentive-based reward system works on the premise that employees are motivated to perform better when they are given rewards for achieving certain targets or goals. However, for the system to be effective, employees need to understand what they need to do to improve their performance and obtain the rewards. Clear communication and training on the criteria for success are key to ensuring that employees know how to maximize their performance and maximize their rewards.

Question 8

An example of an intrinsic reward is recognizing employee accomplishment with a plaque.

Accepted Answer

An example of an extrinsic reward is recognizing employee accomplishment with a plaque.

Question 9

Stock option plans provide incentive compensation to the participants when the stock price falls.

Accepted Answer

Stock option plans provide incentive compensation to the participants when the stock price rises.

Question 10

Outcome-based incentive compensation systems can only be used to motivate appropriate decision-making behavior when employees are empowered to understand the compensation system.

Accepted Answer

Outcome-based incentive compensation systems rely on employees understanding how their actions will impact their pay, and employees can only make appropriate decisions if they understand the system. Therefore, employees must be empowered to understand the compensation system for it to be an effective motivator.

Question 11

Describe some of the drawbacks of using the operating budget as a control device.

Accepted Answer

The answer of Describe some of the drawbacks of using...

Question 12

For some employees,pay may not be a motivator.

Accepted Answer

While pay is an important factor for many employees, research has consistently shown that it is not the only motivator. Other factors like opportunities for growth and development, recognition, autonomy, and job satisfaction can be equally or more important for some individuals.

Question 13

Goal congruence in an organization refers to:

Accepted Answer

Goal congruence refers to the alignment of employee goals with organizational goals. It ensures that employees are motivated to work towards achieving organizational objectives, which in turn benefits the organization as a whole. Option A refers to disciplinary actions against unethical acts, which is not directly related to goal congruence. Option C is a general statement that does not specifically relate to goal congruence, while option D is about enforcing ethical codes, which is also not directly related to goal congruence.

Question 14

What is stretch budgeting? Why is it used?

Accepted Answer

The answer of What is stretch budgeting? Why is it...

Question 15

________ involve(s)a joint decision-making process in which all parties agree about setting the budget targets.

Accepted Answer

The participation method involves a joint decision-making process in which all parties agree about setting the budget targets. This method promotes collaboration and buy-in from all stakeholders, leading to more accurate and achievable budget targets. The other options are not related to joint decision-making and collaboration in budgeting.

Question 16

Empowering employees in management accounting and control system design requires all of the following EXCEPT:

Accepted Answer

While having motivated employees can be beneficial, it is not a requirement for empowering employees in management accounting and control system design. The other options, such as allowing participation in decision making, ensuring understanding of information, and enabling comprehension of performance measures, are all important factors in empowering employees.

Question 17

The dimensions of motivation that are important in designing jobs and specific task include all of the following EXCEPT:

Accepted Answer

The dimensions of motivation that are important in designing jobs and specific task include persistence, direction, and intensity. Control is not considered a dimension of motivation but may be important in the context of job design as it pertains to the level of autonomy or decision-making authority an employee has within their role.

Question 18

The key attribute of intrinsic rewards for compensation is that they:

Accepted Answer

Intrinsic rewards for compensation come from inside the individual and do not have a well-defined monetary value. Examples of intrinsic rewards include a sense of accomplishment, personal growth, and satisfaction from a job well done. These rewards are unique to each individual and cannot be compared or standardized.

Question 19

________ mean(s)that the organization will attempt to reach much higher goals with the current budget.

Accepted Answer

Stretch targets mean that the organization will attempt to reach much higher goals with the current budget. It involves setting ambitious goals that require a significant amount of effort to achieve, even if it means pushing the limits of existing resources. The idea is that by setting stretch targets, organizations can spur creativity and innovation, and push themselves to achieve things they wouldn't have thought possible.

Question 20

What is budget slack? What are the pros and cons of building slack into the budget from the point of view of (a)an employee and (b)a senior manager?

Accepted Answer

The answer of What is budget slack? What are the...

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

________ occur(s) when subordinates ask for excess resources above and beyond what they need to accomplish budget objectives.