B321 Tma 02

Question 1 (a) Simons (1999, pg 768) describes innate want as appetency to engage in behaviours or actions in anticipation of intern every last(predicate)y- generated remunerates much(prenominal) as personal feelings of accomplishment and extrinsic motivation Simons describes as (1999, pg 766) desire to engage in behaviours or actions in anticipation of tangible rewards, much(prenominal) as money or promotion. Extrinsic motivation is created by financial incentives. An incentive as Simons (1999, 767) describes as being a reward or payment that is commitd to motivate carrying out.The two types of motivation mentioned to a higher place can be purposed to design a rewards package for the harvest-home gist managers. First I depart discuss intrinsic motivation this type of motivation is from at bottom (as Simon states (1999, pg 245)) rather than external. Managers can improve intrinsic motivation, Simons (1999, pg 245) states they can make race proud of where they work and overly they can involve subordinates in the goal setting process to affix the likelihood that subordinates go out see the goals as legitimate.If subordinates atomic number 18 included in the process of setting goals- supplicateed to domiciliate input and in figure of speechation they atomic number 18 more than likely to feel that the goals are legitimate and work more diligently to achieve them. The motivation is aligned to direct Tex Aviations carrying out goals, which are, the granting of credit nevertheless managers gestate performance goals set by Ted, periodic charges against their departmental expediencys, managers are more likely to stick to the rules set by Ted beca subroutine they are in arrest of credit. as well, the purchasing of capital equipment and operating supplies but having predetermined limits this gives the managers a find of pick up and fitting to make lasts without having to ask permission whenever a purchase was to be made. Moreover product managers are go outed to set policies such as pricing for products or services. They in addition dumbfound the power to hire, fire and administer the salary. Product centre managers can rewarded because they charter the responsibility to do the above and are free to make choices within set boundaries. Other rewards can be meaningfulness managers whitethorn feel they are doing something important.Also another reward is having the competence, managers can feel satisfied. Lastly, another reward is having the sense of progress, product centre managers will feel they befuddle gained something. I will now discuss the extrinsic incentives, Simons (1999 pg 245-246) states financial performance awards-typically in the form of bonuses-can be linked perspicuously to the achievement of goals and targets. Since incentives are to motivate performance Ted has allocated 10% bonus to managers. (b) Simons four levers of dominance can be used in the implementation of strategy for Air Tex Avia tion.Simons states strategical watch is not achieved through novel and unique performance metre and control system, but through belief systems, barrier systems, diagnostic control systems and interactive control systems working together to control both the implementation of intended strategies and the formation of emergent strategies. Simons (1999, pg 763) describes belief systems as explicit set of organisational definitions that senior managers communicate formally and reinforce systematically to provide basic values, purpose, and direction for the organisation.Figure 14-2 Levers of control (Simons pg, 305) shows belief systems as strategy as Perspective and Obtaining Commitment to the Grand Purpose, this in the scope of Airtex Aviation are firstly Ted and Frank have taken control of the business, Ted is President and knob operating officer and Frank is chairmanship. They also have a vision to grow at a rate of 20% per year for the first five years. To implement strategy Te d and Frank modify authority and made each operating activity a profit centre and grouped them by departments.Departments were given authority over his operations. This creates shared beliefs and missions within the business. Employees will be more motivated because of the more control they have and they will have the sense of belonging to the business. Simons (1999, pg 764) describes boundary systems as explicit statements embedded in formal information systems that trammel and communicate specific risks to be avoided. Boundary Systems in the situation of Air Tex Aviation are, Simons (1999, pg 297) described as rules, limits and proscriptions.Rules in Airtex Aviation are decentralising the business, installing a control system. Limits introduced are profit centres having the authority to buy operating supplies and capital equipment with purchase night club limits. A reason for limits is described by Simons (1999, pg 297) as to allow individual creativity within defined limits o f freedom. Proscriptions include removing Sarah Arthur and her news report system as it was not working and introduce a control system that supports the management and provides information needed in order to make decisions.The accounting system originally gave employees a miss of motivation because they were not involved in the decision making process. Also Simons (1999, pg 279) states communicate standards of business conduct for all employees, thats what the new control system does, involves all employees. My recommendations to AirTex Aviation would be use all four levers of control together as one cant work without the others. Also I would recommend the company when financially able to perhaps train managers, as most employees have only canvass up to high school.Another recommendation would be for the department managers to set out goals for their own departments, use a balance scorecard or something similar. Moreover, I would also recommend the business owners to draw up per haps a mission statement or a statement of purpose and serve it to each manager, so they know the objective and purpose of the business. Overall, the owners have saturnine the business around and should carry on as they have make so. Question 2 (a) In the expression by Jones, T. C. and Dugdale, D. (1994), most of the interviewees agreed, sort out bear witness value is superordinate to payback.I will summarise the views of the five interviewees below. ten a lecturer was one those that thought that NPV is better than PB. disco biscuit does merely think that payback, in Jones, T. C. and Dugdale, D. (1994) works fine for simple, straightforward projects, but does offer how useless it is and NPV gives the right answer and considers time value for money. He also thinks that NPV has no disadvantage whatsoever. He also goes on to say that conniving NPV is easy because of the use of computers. His academic group also agree with him that NPV is superior.Frank chief accountant was one of those interviewed who was against NPV and suspicious of it, describing it as dangerous Jones, T. C. and Dugdale, D. (1994). He has been victimisation PB for many years and says it is simple to use and NPV is complicated, time overpowering and conveys spurious accuracy Jones, T. C. and Dugdale, D. (1994). He also says that NPV is hard for managers to understand they cull PB. Simon a senior finance manager thought no judgement method has importance but believes NPV only relevant with high engage rates & long time periods, Jones, T.C. and Dugdale, D. (1994). He believes that information given to managers should be what they want and accountants should help in making enthronisation decisions not resolve which appraisal method to use. Judy a junior finance manager prefers to use NPV rather than PB because it considers time value for money which is important in her view. She also says NPV gives ability to motley assumptions & identify different outcomes Jones, T. C. and Du gdale, D. (1994). She has very bullnecked views for NPV and thinks managers should use this technique only.Managers have studied MBAs so thinks it will be easy for them to understand. But She fears that she may be a victim of my training which magnate have been academic brainwashing, Jones, T. C. and Dugdale, D. (1994). Len a finance officer also says net present value is superior to payback. He doesnt agree with Adams suggestion that PB figures might be adjusted to reflect more clearly the results of NPV analysis Jones, T. C. and Dugdale, D, because of good rules. (1994).He too like Adam finds calculating NBV easy because of the use of computers. The interviewees which I mostly agree with are Len, Judy and Adam this is because, they believe that NPV is superior to PB. Also NPV considers time value of money and is easy to calculate because of the use of computers. I also agree with Judy that managers should be taught NPV because PB is simple and as Adam said NPV should be used fo r minor projects. (b) Pure reason out in my view would be coming up with answers which would be the norm and what most people would agree to.An example in B321 baptistry studies would have to be that of Classic Pen Company Developing an ABC Model. Jane Dempsey came up with information by using methods such as activity ground cost used by accountants. Overall, I think pure cogitate would have the most influence on someones decision making process this is because most people adhere to the norm they siret want to be seen as deviant. Also most people would be scared to do otherwise just in case the decision doesnt turn out to be as expected, which may get them into a lot of trouble. (c)My views have changed since reading the article because, before I thought that calculating net present value for investment appraisal was complex and very complicated but both Adam and Len find it easy because of the use of computers. Also before reading the article I thought payback was completely useless and unreliable for investment appraisal but as Adam points out it is fine to use on simple projects. Also another benefit for NPV is that it gives ability to alter assumptions & identify different outcomes, Jones, T. C. and Dugdale, D. (1994) as Judy points out.Both appraisal methods have their benefits, net present value has more benefits overall. Question 3 (a) Total railroad car hours 880,000 ? 44,000 = 20 Game Pies 20 ? 4,000 = 80,000 ? 2000 = ? 40 per batch Pork Pies 20 ? 40,000 = 800,000 ? 20,000 = ? 40 per batch (b) Set up related 420,000 ? 200 = 2,100 Pork Pies 2,100 ? cxx = 252,000 ? 20,000 = ? 12. 60 Game Pies 2,100 ? 80 = 168,000 ? 2,000 = ? 84 Purchasing related 240,000 ? 480 = calciferol Pork Pies 500 ? 320 = 160,000 ? 20,000 = ? 8 Game Pies 500? 160 = 80,000 ? 2,000 = ? 40 Volume related 44,000 + 88,000 = 132,000 220,000 ? 32,000 = 1. 67 Pork Pies 1. 67 ? 120,000 = ? 200,400 ? 20,000 = ? 10. 02 Game Pies 1. 67 ? 12,000 = ? 20,040 ? 2000 = ? 10. 02 Cost cent re cost for pork pies per batch ? 12. 60 + ? 8 + ? 10. 02 = ? 30. 62 Cost centre costs for game pies per batch ? 84 + ? 40 + ? 10. 02 = ? 134. 02 (c) The difference with activity based costing and traditional costing is, firstly traditional costing only assigns overhead cost machine hours or direct labour hours to products. Whereas activity based costing uses activities for accumulating costs as described by Atkinson (2004, pg 127).