Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 12, Problem 27CADQ
To determine
Define the reasons behind setting the unrealistic profit target.
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Which of the following statements regarding flaws suffered by financial measures is not correct?A)They are hard to quantify.B)They do little to motivate employees to improve accounting profits.C)They are not effective in getting managers' attention.D)They are useful in identifying operational problems.E)None of the above.
Cressey’s “fraud triangle” states that three factors—non-shareable financial need, perceived opportunity, and rationalization—are present in cases of occupational fraud. Which of these three factors, if any, is the most important in causing executives, managers, and employees to commit occupational fraud?
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management are all examples of factors affecting:
Market risk.
Systematic risk.
Diversifiable risk.
Company-specific risk that cannot be diversified away.
Chapter 12 Solutions
Fundamentals of Cost Accounting
Ch. 12 - What does decentralization mean in the context of...Ch. 12 - Why is performance measurement an important...Ch. 12 - Prob. 3RQCh. 12 - What does dysfunctional decision making refer to?Ch. 12 - Prob. 5RQCh. 12 - What are the five basic kinds of decentralized...Ch. 12 - What is goal congruence? How is it different from...Ch. 12 - Prob. 8RQCh. 12 - What is relative performance evaluation?Ch. 12 - Prob. 10RQ
Ch. 12 - Prob. 11RQCh. 12 - Prob. 12RQCh. 12 - The management control system collects information...Ch. 12 - Salespeople are often paid a commission based on...Ch. 12 - Prob. 15CADQCh. 12 - Prob. 16CADQCh. 12 - On December 30, a manager determines that income...Ch. 12 - Prob. 18CADQCh. 12 - Prob. 19CADQCh. 12 - The manager of an operating department just...Ch. 12 - In the previous chapters, we considered different...Ch. 12 - A company has a bonus plan that states that...Ch. 12 - Prob. 23CADQCh. 12 - Prob. 24CADQCh. 12 - Prob. 25CADQCh. 12 - Prob. 26CADQCh. 12 - Prob. 27CADQCh. 12 - Prob. 28CADQCh. 12 - Prob. 29ECh. 12 - Evaluating Management Control SystemsEthical...Ch. 12 - Prob. 31ECh. 12 - Management Control Systems and Incentives A...Ch. 12 - Prob. 33ECh. 12 - Prob. 34ECh. 12 - Prob. 35ECh. 12 - Alternative Allocation Bases: Service Bartolo...Ch. 12 - Prob. 37ECh. 12 - Single versus Dual Rates: Ethical Considerations A...Ch. 12 - Single versus Dual Rates
Using the data for the...Ch. 12 - Alternative Allocation Bases Thompson Aeronautics...Ch. 12 - Tone at the Top, Ethics Once upon a time, a major...Ch. 12 - Prob. 42ECh. 12 - Prob. 43ECh. 12 - Internal Controls Commonly in many organizations,...Ch. 12 - Evaluating Management Control Systems SPG Company...Ch. 12 - Analyze Performance Report for Decentralized...Ch. 12 - Divisional Performance Measurement: Behavioral...Ch. 12 - Prob. 48PCh. 12 - Prob. 49PCh. 12 - Cost Allocations: Comparison of Dual and Single...Ch. 12 - Cost Allocation for Travel Reimbursement Your...Ch. 12 - Incentives, Illegal Activities, and Ethics An...
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Similar questions
- Is there a way to prevent managers from focusing on accounting measures as performance measures?arrow_forwardManagers are often faced with conditions that may cause earnings to be managed. There is a difference between managing income and manipulating earnings. Excluding the ethical and fraud issues associated with managing earnings: Identify conditions that would lead an analysist to expect that management might attempt to manage earnings upward and, Identify conditions that would lead an analysist to expect that management might attempt to manage earnings downward.arrow_forwardAgency theory suggests that one way to motivate managers to act in the best interests of the owners/shareholders is to link managerial compensation to firms' payoffs, such as net income or share returns. However, such a linkage imposes risk on the manager. Required: (1) Why is it important to control or reduce some of the risk thus imposed on managers? Explain. Discuss two methods by which risk imposed on the managers could be reduced.arrow_forward
- Segregation of duties is an important concept in internal control. However, segregation of duties is often a challenge for smaller businesses because they do not have sufficient staff to segregate duties. Normally, the segregation of duties identified below results in either a significant deficiency or a material weakness in internal control.For each “segregation of duties: problem identified here:a. Identify the risk to financial reporting that is associated with the inadequacy of the segregation of duties.b. Identify other controls that might mitigate the segregation of duties risks.c. If a control is identified that would mitigate the risks, briefly indicate what evidence the auditor would need to gather to determine that the control is operating effectively.Situations1. The same individual handles cash receipts, the bank reconciliation, and customer complaints.2. The same person prepares billings to customers and also collects cash receipts and applies them to customer accounts.3.…arrow_forwardMost managers have no difficulty avoiding blatantly dishonest actions. But sometimes there are gray areas, where it is debatable whether an action is unethical and unacceptable. Suggest an important ethical dilemma that companies may face. What principles should guide their decision?arrow_forwarda culture of greed or ethical indifference within an organization.arrow_forward
- Segregation of duties is an important internal control. However,this control is often a challenge for smaller businesses because they donot have sufficient staff. Normally, a segregation of duties deficiencyresults in either a significant deficiency or a material weakness in internalcontrol. For each segregation of duties deficiency identified as(1)–(6), complete the following three tasks:a. Indicate the risk to financial reporting that is associated with theinadequacy of the segregation of duties.b. Identify other controls that might mitigate the segregation ofduties risks.c. Identify possible tests of controls for the mitigating controlsselected in (b).The inadequate segregation of duty situations includes:1. The same individual handles cash receipts, the bank reconciliation,and customer complaints.2. The same person prepares billings to customers and also collectscash receipts and applies them to customer accounts.3. The person who prepares billings to customers does not handlecash…arrow_forwardWhich of the following best describes the potential impact of business risk on Earnings Quality? Select one: a. Business risk is mostly composed of financial risk factors and it has minimal effect on earnings quality. b. Higher earnings quality is linked with companies more insulated from business risk. While business risk is not primarily a result of management’s discretionary actions, this risk can be lowered by skillful management strategies.' c. A higher level of earnings quality can be observed in the industries with high business risk, because higher risk means higher returns d. For managing business risk, the managers almost have no discretion, therefore business risk is not directly or indirectly related to earnings quality.arrow_forwardIn the scenario, where employer has been putting more emphasis on controlling costs for the various businesses. With the slowing of overall spending in one sector, while ordering managers to closely monitor expenses, selling several companies and giving vice presidents greater responsibility for statements of financial positions. Whatpositive and negative consequences might this pose to the company in future fraud prevention? Outline at least three of each type.arrow_forward
- Which of the following factors creates an opportunity for fraud to be committed in an organization? a. Management demands financial success. b. Poor internal control. c. Commitments tied to debt covenants. d. Management is aggressive in its application of accounting rules.arrow_forward14) Abusive behavior is difficult to assess and manage because of A) different rating companies. B) diversity in culture and lifestyle. C) the fact that it leads to higher levels of unemployment. D) the debate surrounding the acceptability. 14) E) ethical issues that often emerge from conflict.arrow_forwardHow to prevent and detect fraud, and make it less likely to occur in organization?arrow_forward
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