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(a) What caused the large increases in postal expense at WDI? How could such large increases have escaped management's scrutiny?

(b) Suggest changes in WDI's accounting system to prevent similar situations from occurring in the future.

(c) What steps should WDI take to bring postal expenses under management control?

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This solution discusses postal experience, accounting system and management control. The explanation is given in 298 words.

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What caused the large increases in postal expense at WDI? How could such large increases have escaped management's scrutiny?

The large increase in postal expense at WDI was caused due to increased use of express mail service to send proposals and related document. Such large increase have escaped management's scrutiny because the huge increase in costs remained unnoticed due to poor accounting practices in terms of properly reflecting the increase, lack of interest and communication on part of finance ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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