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ACCA F2

Management Accounting (MA)

管理会计

ACCA Lecturer: Belinda Qiu

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Part C Project appraisal

1. Relevant/irrelevant cost

2. Interest rate

3. Discount factor( cost of capital)

4. PV ( annuity, perpetuity)

5. NPV (calculation, adv. & disadv.)

6. Payback period (calculation, adv. & disadv.)

7. Discounted Payback period (calculation, adv. & disadv.)

8. IRR (calculation, adv. & disadv.)


Part C Behavioral aspects of budgeting

1. Problems during the budgeting process

2. Two types of budgeting setting (adv. & disadv.)

3. Target setting

4. Incentive scheme



1. Introduction

1. 1 Why we need to analyse behavioral aspects? (problem)



1.2 results

Four kinds:

-poor attitudes when setting budgets

-poor attitudes when putting plan into action

-poor attitudes when controlling

-motivator but also demotivator



2. Participation in budgeting process

2.1 two ways to set a budget

2.1.1 imposed style of budgeting ( top-down budgeting )



2.1.2 participative style of budgeting ( Bottom-up budgeting )



3. Target setting

-Targets will assist motivation and appraisal if they are at the right level.

Not too difficult, as this will demotivate staff, not to easy, as managers

are unlikely to strive for optimal performance.

-An ideal target should be slightly above the anticipated performance

level.

-Targets should be :

communication in advance;

dependent on factors controllable by the individual ;

based on quantifiable factors;

linked to appropriate rewards and penalties;

chosen carefully to ensure goal congruence



-When we consider the motivating effect of budget, we should

remember that the budgets have a limited motivational effect. It is the

reward structure that is linked to achieving the budgeted target, or

lack of reward for non-achievement, which provides the real underlyin

g motivation potential of budgets. The rewards need not to be directly

financial but could be in terms of future prospective of promotion.



4. Incentive schemes

The characteristics of a good employee reward system are as follows:

-fairness

-motivational

-understandable

-constantly applied

-objective

-universal



Q1. Which of the following statements about imposed budgets are

correct?

(1)Imposed budgets are likely to set realistic targets because senior

management have the best idea of what is achievable in each part

of the business

(2) Imposed budgets can be less effective than budgets set on a

participative basis, because it is difficult for an individual to be mot

ivated to achieve targets set by someone else

(3) Imposed budgets are generally quicker to prepare and finalise

than participative budgets.

A. 12 C. 23

B. 13 D. 3



Q2. The following relate to the participation of junior management in

setting budgets:

1. It speedster up the setting of budgets .

2. It increases the motivation of junior managers.

3. It reduces the level of budget padding

Which are true?

A. 1

B. 2

C. 23

D. 123



Q3. Which two of the following are mostly likely to influence the

motivation of budget holders?

1. The contents of budget manual

2. The extent of participation in budgeting setting

3. The level of difficulty at which budgets are set

4. The structure of the budget committee

A. 12

B. 23

C. 34

D. 14

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