New Kaplan 1 focus on exam items

Question 1

Participation in budgeting setting

Advantages & Diadvantages

Answer 1

Adv.
1. Ownership. More likely to accept if involved not imposed.

2. Feeling valued likely to be motivating
3. Detailed knowledge is valuable

Dis:
1. Possible goal incongruence, may build in slack or be ‘empire building’. Can use knowledge to do this

2. If too many people involved can make process slow and difficult to manage.
3. Participation process may not be genuine. Falseness can be more demotivating than imposing.
   Eg. If senior mgmnt overrules

Question 2

Top down (imposed)

Answer 2

Dis.
1. Mgrs feel they had no say and will not have ownership…. therefore will not take responsibility

2. Unlikely to motivate.
3. (therefore will not take responsibility)

Av.
1. Avoid budgetary slack.

2. Quicker and easier due to less people involved.
3. Top mgrs have better overview of overall company objectives

Question 3

If have a materials shortage how to deal with?

short term shortage (3)

long term shortage (4)

Answer 3

Short term:

1. run down material inventory
2. run down finished goods inventory
3. Reschedule purchases if supply fluctuates ..

Long Term:

1. Seek alt supplier
2. Seek alt material
3. Make an alt product
4. Buy in finished goods