Quantitative analysis in budgeting

Question 1

whats the learning curve theory

Answer 1

this theory applies to situations where the workforce as a whole improves in efficiency with experience

Question 2

4 types of standards

Answer 2

current standard
basic standard
ideal standard
attainable standard

Question 3

what is the impact on behaviour due to the ideal standard

Answer 3

there is an incentive to be more efficient however employees may feel the goals are unattainable therefore won’t work as hard

Question 4

what is the impact on behaviour due to the current standard

Answer 4

will not motivate employees to work any harder than they are currently

Question 5

what is the impact on behaviour due to the basic standard

Answer 5

unfavourable impact on behaviour as over time employees will know how to reach the targets easily

Question 6

what is the impact on behaviour due to the attainable standard

Answer 6

incentive to work harder as its a realistic goal

Question 7

what is responsibility accounting

Answer 7

a system of accounting that segregates revenue and costs into areas of personal responsibility in order to monitor and assess the performance of each part of an organisation

Question 8

criticisms of standard costing (3)

Answer 8

only works in a stable environment which is unlikely

regular revisions are needed which is expensive

meeting the standard doesn’t mean there aren’t further improvements that could be made