William L.

Wenceslao Jr Managerial Accounting

Assignment 1 Prof. Michael Auditor, CPA, MBA

EXERCISE 1–1 Planning and Control

1. No, as a Sales manager of the organization, it is appropriate that you must contribute
best educated guess in your plan, the analysis of your expertise when conducting non-
financial aspects will provide avenue of numerous alternative decisions and may
influence other elements of financial reports that could affect the total value of your
organization and to your boss.

2. Maybe, Sales manager should establish a sales budget for the organization, the boss
may provide inputs, but the most important thing is to ensure that the sales budget for
the company being presented should have approval from your boss, and by that, you
don’t need to worry about it.

3. By establishing sales budget, it will be our benchmark to estimate future sales. The
company will strive to achieve the sales budget accordingly.

4. Bonuses or incentives are motivational tools by the company for their employees to
reach sales target /quota. Sales manager may present detail plan about the sales
budget for every department or area, this may require him to make sure that sales
budget is properly allocated, as a sales manager it is your responsibility that you
understand your forecast as it will reflect it to you if you fail.

5. As a sales manager you are confident about your sales budget for the company and
your boss may think or require you to reach much more than your expected sales
budget.

6. If the sales budget is not properly allocated and measured inappropriately, conflict may
arise among Sales people in different areas. But if it is properly allocated and sales
budget reached its target goal employees may strive more because of bonus/incentives
that they will acquire.
Exercise 1 – 2 Controlling

1. Pause and think, 100 pieces of luggage for each airplane should be able to unload in 10
minutes. So I assume that 50 pieces of luggage would be unload in 5 minutes. And I
took 13 minutes to unload 150 pieces of luggage that’s not bad if the average of 100
pieces of luggage for each airplane should be unloaded within 10 minutes, 150 of
luggage exceeded the average given by your boss, and for me it will take 15 minutes to
unload if we follow the preceding assumptions. And for me I think I did my work
efficiently. He shouldn’t yell me like that, but instead call my attention professionally if I
made a mistake.

2. Establishing control system provides basis to our actions and limitations.

Exercise 1 – 3 Decision Making

Assume that you are a senior leader of the company you are currently connected with. For
each of the 12 decisions below, provide an example of how that type of decision might be
applicable to your company setting.

1. This coming Christmas and New-year season, our production will be focus producing packed
bread specifically Cream Bread Big and Chiffon Cakes Only

2. Entering new segment by selling classic cakes

3. Selling price will be at is, pricing will be based constantly on the marketplace.

4. Due to this pandemic our delivery schedule will be focus primarily in General Santos City
only. Other variety of packed products that is exclusively to be produced and delivered at South
Cotabato provinces will be terminated.

5. In terms of product variability (basic food) and being a market leader of our very own flagship
we will follow market penetration strategy by producing and delivering to our retail outlet and
trade display partner to reach our existing market

6. Existing channel partner and corporate-owned retail

7. For walk-in customers who pay 1,000 to 2,999 worth of purchased will get 2% discount, 3000
– 5999 will get 3% discount, 6000 and above will get 5% discount.

8. Koronadal City and Polomolok South Cotabato

9. Recruiting seasonal production staff to assist production in producing target demand

10. Special and ordinary commissary located at Laurel St. will assist full production on
Christmas and New-year season to secure full production

11. Low level of inventory and machine repair issues

12. Monitoring ending display at the end of the day and make any adjustment on delivery if
necessary

EXERCISE 1–4 Ethics and the Manager

Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of
Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele.
Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant
controller, was asked to oversee the financial reporting for these test stores, and she and other
management personnel were offered bonuses based on the sales growth and profitability of these
stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated
goods that should have been discounted for sale or returned to the manufacturer. She discussed the
situation with her management colleagues; the consensus was to ignore reporting this inventory as
obsolete because reporting it would diminish the financial results and their bonuses.

Required 1. According to the IMA’s Statement of Ethical Professional Practice, would it be

ethical for Perlman not to report the inventory as obsolete? 2. Would it be easy for Perlman to
take the ethical action in this situation?

1. Based on the ethical standards of any business profession the moral precepts honesty is
always prominent and explicitly explained its importance. Hence it is an unethical act if
Ms. Perlman committed to doing so, the motives of this act are caused by the conflict of
interest by taking advantage to manipulate the reports for bonuses being offered to
them. Based on the principles of IMA ethical standard, Ms. Perlman would breach the
responsibility standard set forth by IMA Integrity and Credibility.

2. Yes, Ms. Perlman is designated as assistant controller of the firm, if she value her
position and duties, then she must act what is right for her company.

EXERCISE 1–5 Strategy The table below contains the names of six companies.

Required: For each company, categorize its strategy as being focused on customer intimacy,
operational excellence, or product leadership. If you wish to improve your understanding of each
company’s customer value proposition before completing the exercise, review its most recent
annual report. To obtain electronic access to this information, perform an Internet search on
each company’s name followed by the words “annual report.”

1. Deere - Product Leadership

2. FedEx - Operational Excellence
3. State farm Insurance - Customer intimacy
4. BMW - Product leadership
5. Amazon.com - Operational Excellence
6. Charles Schwab - Customer intimacy
EXERCISE 1–6 Enterprise Risk Management The table below refers to seven industries.

Required: For each industry, identify one important risk faced by the companies that compete
within that industry. Also, describe one control that companies could use to reduce the risk that
you have identified.

1. Airlines
Type of risk : High turnover of cancelled flights
Control to reduce risk : Establish customer response oriented process and set
cancellation charges higher price than the selling price.

2. Pharmaceutical drugs
Type of risk : FIFO is not properly implemented
Control to reduce risk : implement proper monitoring of stocks

3. Package Delivery
Type of risk : Employee not properly doing his job that leads to customer
dissatisfaction
Control to reduce risk : Establish plan that motivate and orient employees the
importance of work ethics and standards, and improve monitoring process to track them
easily

4. Banking
Type of risk : Depositor account being stolen
Control to reduce risk : Develop intensive security protection against electronic hacker

5. Oil and Gas

Type of risk : Health problems may arise to employees who has direct contact to
fuel/gasoline
Control to reduce risk : Create plans that protect employees against hazardous effects
derived from inhaling oil/gas

6. E-commerce
 Type of risk : Frequent system errors and bugs report
Control to reduce risk : Carefully check website before executing to cyberspace
7. Automotive
Type of risk:
Control to reduce risk: