Explore BrainMass

Capital Budgeting: Hold managers accountable for overruns

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Suggest some ways to hold managers accountable for spending overruns. Recommend when capital projects should be abandoned due to subsequent cost overruns. Support your position.

© BrainMass Inc. brainmass.com October 25, 2018, 8:43 am ad1c9bdddf

Solution Preview

Of course the best way to hold managers accountable is to make it in their personal interest: impact their pay! So, give a bonus for projects that meet or exceed their projections! This means, of course, that managers better be careful about padding their projections in capital budget requests because the actual returns will be compared to them. It will no longer be smart to show a terrific ...

Solution Summary

Your discussion gives a policy for holding managers accountable and a policy for recommending when to abandon a project.

See Also This Related BrainMass Solution

River Beverages: Budgeting Process and responsibility accounting

Please see attached file.

Attached is an example I located on the web utilizing a ficticious company. I have included all of the information pertinent in answering the few questions invloved. I believe that I am making this more difficult than I should; however, any assistance you can provide with regard to completing this example would be greatly appreciated. Because I have included additional reading to make completing of the example easier I am adding additional credits as the reading could make it a little more time consuming.


a. Discuss each step in River Beverages' budgeting process. Begin with the division manager's
initial reports and end with the board of directors' approval. Is each step necessary? Explain.

b. Evaluate River Beverages' responsibility-accounting system. Specifically, should the plant
managers be held responsible for costs or profits? Why?

c. Write a report to River Beverages' management stating the advantages and disadvantages of the company's budgeting process. Start your report by stating your assumption(s) about what River Beverages' management wants the budgeting process to accomplish.

View Full Posting Details