1. De Anza Manufacturing has just hired a new controller, Diana Deanza. During her first week on the job, Diana was asked to establish a budget for operating expenses in 2020.

Since Diana was not yet familiar with the operations of De Anza Manufacturing, she decided to budget these expenses using the same procedures as the prior controller.

Therefore, in order to establish a budget for operating expenses, Diana started with actual operating expenses incurred in 2019 and added 4.3 percent. Diana based this percentage on inflation as measured by the consumer price index.

Please comment on the effectiveness of Diana’s budgeting strategy.

2.What are your thoughts on a concept/ process of “budgetary control” in context of operational management within an organization?

At your work, your boss is asking you present a budgetary control process as a part of your organizational initiatives. What steps should be included in your presentation?

3.Topic: Standard Costing and Variance Analysis

Standard cost systems set budgets for the materials, labor, and factory overhead used by a manufacturer to produce its product. Deviations from these standards are reported as variances.

In ch.23, we learned that manufacturing firms set standards for the amount and price of direct materials, direct labor, and overhead consumed by their products. Standards establish a benchmark to be used in evaluating actual performance. They allow management to recognize when costs are not in line with the company’s projections and to take corrective action.

Standards-variance analysis cost control system can be applied to non-manufacturing businesses, provided that they use repetitive activities to produce a common product or service.

Based on your own real-life experience, describe and discuss a non-manufacturing (service) business that could benefit from the use of standards. Also explain how standards would help that business control its operations.

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