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Q. Show the Arguments against the controllability principle?
- Political arguments may occur over such costs which are more subjective than objective when determining controllability. It is not always black and white when determining controllability from uncontrollability.
- Just because a cost is uncontrollable does not mean a manager being assessed should ignore it altogether. As an example if managers recognise there is an interest charge by head office based upon the capital employed used within a division, then to hold them more accountable could help improve efficiency by the minimisation of capital employed. In the case of head office charges, lack of accountability could encourage over consumption of these resources provided centrally.
(a) XUZ Company produces readymade garments for men. The purchasing officer collects the following information:- Annual demand for Jeans 40,0
Q. Show the Merits of residual income? Merits of residual income (RI) - Consistent or goal congruence with profit maximisation e.g. an enforced measure of profitability.
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