HI5017 Managerial Accounting Assignment Help

Question 1

1)

Budgetary slack is the belittling of estimated revenue or showing excessive expenses intentionally. These methods are adopted by managers to increase their performance bonuses. These can be very harmful to the company and can have severe consequences to the company. Budgetary slack can be obtained by 2 methods either by showing or estimating excess expenses or by deliberate underestimation of sales. There are many harmful consequences of budgetary slack:

  1. Decreasing competitiveness: As the estimated revenue of the firm is low therefore the managers or employees lack motivation as it requires less effort to achieve the stipulated target or making more than the target to earn bonuses.

  2. Shareholders suffer: as the budget or target of the company is low than its competition therefore it reduces the overall profit or the profit increase year on year is less than its competitors. This directly reflects in the share price as the investors feel that the company is not efficient enough to compete with its competitors and thus reducing the share price of the company.

  3. Attrition Rate will be higher: Due to lower growth or less penetration of the company, will leads to a decrease in the profitability of the company. Therefore the jobs at the company will be at high risk and thus it will also increase the attrition rate of the company.

  4. Loss of talent: employees will get good opportunities with high pay packages from the competitor will also lead to the movement of manpower or star employees to its immediate competitors

2) As given in the example the bonus system works when an employee achieves the stipulated target and the bonus is received on the extra numbers achieved other than the target. The bonus system encourages budgetary slack. This can be explained by the following example given above.

From the above example, we are aware that Tanya Williams has submitted a budgetary projection of 700 bank accounts annually. Therefore if she had kept her target a very reasonable number which is achievable very easily and comfortable she will be able earn bonus at a large scale. Therefore for example, if she ultimately opens 900 accounts she will get a bonus of (200*50) $1000. Whereas, if she had kept her budget targeted at 800 accounts annually, she would have earned only (100*50) $5000 which is half the previous bonus. Thus we can conclude that the bonus program encourages budgetary slack to earn an extra amount of bonus.

3) Budgetary slack can happen when the demands of the management are very high. Like for example the average accounts that are opened in an area is 700 annually , but if the management demands that the manager should open at least 1200 accounts then it would create a lack of motivation to the manager and thus the manager would deliberately reduce the budget or increase the expenses thus creating budgetary slack. Therefore it is a double edged sword as it has benefits as well as drawbacks. Therefore it is advisable that the management of the company should always keep a reasonable target so that there doesn’t arise any lack of motivation and they would always feel energetic and work for the company to earn maximum bonuses.

Question 2

If the target is very high and is unachievable then the employees may become complacent as they will not be ready to work hard. They might feel that as the target is too high and it is not achievable therefore it’s better to not work very hard and just earn the fixed salary. This can be explained in a better manner taking into consideration the above example. In the example given in the question the annual target has been kept at 700 accounts.  Therefore Tanya will receive extra $50 for every account above 700 accounts. Taking a hypothetical example in that example if the target was 1000 accounts Tanya will definitely feel tired in her mind as the target is too high to achieve. And maybe this would lead to only opening of 500 accounts annually by Tanya. Therefore we can conclude that there may be loss of 200 accounts annually just due to the morale and complacency of the manager.

Therefore it is advisable that thetarget should be set talking to every possible level of employee so that the employee may also feel special and the management would also be able to set an idle target that is achievable and thus would increase the profits of the business.

Question 3

a)

revised fees per subject

 $              3,000

scholarship students

200

average class

80

no of seem per year

2

no of subjects per semester

4

total subjects in a year

8

revenue from 1 student per year

 $            24,000

total no of classes

394

total no of subjects in a year

3150

no of subjects per teacher

3

no of teachers required to cover all the classes

1050

cost of per teacher

$120,000

 

 

                    

 

 

 

 

REVENUE BUDGET

AMT

 

 

revenue

 $  756,000,000

scholarships

 $      4,800,000

actual revenue

 $ 751,200,000

 

 

academic staff

$126,000,000

 

 

profit

 $ 625,200,000

 

 

 

b) From the information we get that the total no of students is 31500 and there are 8 subjects every academic year. With an age of 80 students per class, there is a requirement of (31500/80) = 394 classrooms. It is provided that every teacher teaches 3 subjects annually. Therefore the no of teachers required is 3150/3= 1050 teachers to cover all the classes.

c) With the huge inflow of the number of students in the university it is pertinent that the full-time academic staff of the university needs to increase: But if there is a shortage of full time academic staff south Hampton can take certain steps:

1. They can reduce the staff cost and as well as accommodate the huge inflow of students by introducing online lectures.

2. They can accommodate more students per class. They can increase the student count per class from 80 to 100.

3. They can merge some classes of the same subject teacher. This will reduce the workload of the teacher as the teacher need not have to take 2 classes of the same subject.

4. They can have many contract-based or part-time teachers to fill in the void demand.

5. They can partner with nearby educational institutes.

No Need To Pay Extra
  • Turnitin Report

    $10.00
  • Proofreading and Editing

    $9.00
    Per Page
  • Consultation with Expert

    $35.00
    Per Hour
  • Live Session 1-on-1

    $40.00
    Per 30 min.
  • Quality Check

    $25.00
  • Total

    Free

New Special Offer

Get 25% Off

best-assignment-experts-review

Call Back