Curtin University ACCT3001 Accounting, Behaviour and Control Portfolio

This report analyzes key concepts in accounting, behavior, and control. It examines strategic positioning using Porter's framework, comparing two companies based on cost and service quality, and the value perception of a customer. It also explores management accounting information systems, highlighting essential data for effective business management. The report further evaluates cost centers using standard costing, discusses converting cost centers into profit centers, and assesses performance metrics. Finally, it delves into budgetary slack, detailing its advantages, disadvantages, and its impact on managers, corporate performance, and long-term profitability. The report references relevant academic sources to support its analysis.

Running head: ACCOUNTING, BEHAVIOURAL AND CONTROL
Accounting, Behavioural and Control
Name of the Student
Name of the University
Author Note

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ACCOUNTING, BEHAVIOURAL AND CONTROL
Table of Contents
Answer to Question one...............................................................................................................2
Answer to Question two...............................................................................................................4
Answer to Question three.............................................................................................................5
References....................................................................................................................................8

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Answer to Question one
1. According to Porter, a strategy should reflect the distinctive value chain which configures
all the key businesses and operations in a unique manner which will be difficult to
imitate. The strategic positioning of a firm usually results in two aspects for a firm. They
either result in premium prices or in lower costs for the firm. In the given scenario, both
Poppy and Iris have positioned themselves to obtain the maximum benefits from the
strengths possessed by them. The main strength of Poppy in comparison to Iris is its
lower cost while the strength of Iris when compared to Poppy is the quality of services
provided by it. The strategic positioning of Poppy is that of a low cost product with its
focus mainly on lower operational and maintenance costs (Martynov et al. 2017).
However, the strategic position of Iris is that of a premium product with its emphasis on
the quicker delivery time and service reputation of the product. Hence, there is a clear
distinction between the strategic positions of both the firms. The positioning of Poppy
mainly focuses on the lower costs which provide more financial profits over a period of
time. However, Iris focuses on positioning itself as a premium product which provides
more quality with a lower delivery time. Hence, the main aim of Iris is to project itself as
an entity providing higher quality despite the higher prices charged by it. The point of
difference in this case being the manner in which the companies market their products to
the general public.
2. Michael Porter suggests that value is the price that someone is willing to pay for a
particular product. This may be created due to the unique features of the product which
meet the requirements of the customers (Wicks, Andrew and Jeffrey 2015). In the given
case, Adam perceives Iris to be more valuable than Poppy. The main source of the value

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in this case is the service reputation of the company and the quicker delivery time
provided by the entity. Here, the value obtained can be said to be perceived in nature as
Adam looks to obtain a product which provides better quality products even at a higher
price. As the delivery period is also lower, another source of value is to start the
production quicker in order to quickly earn the profits after using the machine as a part of
the business. Other sources of value can include the lower amount of defects recorded in
the products manufactured with the use of the machine and the overall quality of the
products produced.
3. In the given case, the strategic positioning of Poppy is based on its ability to produce
products at a lower cost than Iris. However, the firm lost out on its sales because of the
higher time taken to produce the machines and a higher number of defective units
produced by the entity. Hence, in this case, the company would be able to better compete
with Iris with a reduction in the cost required to produce the products. Other benefits that
would be received by the entity include positioning itself as a premium product without
any increase in the costs produced by it. The company can complement its existing cost
benefit with the increase in its overall quality and strengthen its competitive position in
the market. The management accounting information system is a useful tool in helping
better run a business with timely information on internal operations. The management
accounts system can help better manage a business with the information provided to it
and by clearly understanding the requirements of the business. Hence, in the given case,
the manager should record the amount of reduction in costs, time required to produce a
product and the number of defective units acceptable in one production lot. Other useful
information which can be provided to the management accounting information system

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include the budget available to implement the new plan and the time available to
implement it. The employees and other people involved in the manufacturing of the
machines should also be informed about the functioning of the new accounting
information system to ensure an effective implementation of it. Other information should
be provided in relation to the delivery time and the maximum delivery costs which can be
allowed as a part of the product. All of these costs play an important role in determining
the costs which can be incurred as a part of manufacturing the product and are useful in
the successful implementation of the management accounting information system.
Answer to Question two
1. One system which can be effectively utilised in evaluating the cost center for a particular
point of time is the use of standard costing (Armitage et al. 2016). In this case, the
company set up a desired set of standards with regards to the time taken to complete the
maintenance of a product and the costs involved in completing it. These standards can be
set with the help of a variety of factors like the performance of competitors, past
performance of the maintenance division and the current capacity of the division. Other
methods of review include the total cost involved in completing the services for a
particular financial year. The number of times a product related to a division is being
manufactured should also be measured against the standards previously set by the entity
to evaluate the performance of the manager of the maintenance division.
2. On converting the cost center into a profit center, it is safe to expect that the number of
user service requests from within the organisation would decline. This is because any
request to service a particular product would involve the payment of a fees from the
requesting department. This would lead to a reduction in the profits of the department

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asking for the service request and increase the profits of the maintenance division. It
would also result in noting the departments which are most inefficient and measures can
be taken to improve their performance. These corrective measures would be helpful in
reducing the burden on the maintenance division while also highlighting its importance to
the organisation. Due to the reduction in these service requests, the efficiency of the
maintenance division would also improve and the company may have additional capacity.
This can allow the company to take service requests from outside parties and also result
in profit generation for the maintenance services provided by it. Hence, as the analysis of
the performance of all individual divisions becomes easy due to the implementation of
the profit center, it is expected that the number of service user requests from within the
entity would reduce.
3. After converting a cost center into a profit center, the performance of the maintenance
division manager should be evaluated on the basis of the revenue generated by the
division. If the division is able to generate lower revenues from within the entity, it is an
indicator of efficiency within the organisation. The other measures of evaluating the
performance of the manager include the time taken to process a request and the efficiency
of the services being performed (Bandiera et al. 2015). Apart from these, the revenue
generated by the unit and the costs involved in its running should be assessed together to
understand whether the manager is performing efficiently or not.
Answer to Question three
A. Budgetary slack is defined as the practice in which the budgeted revenue of an entity is
underestimated and the budgeted expenses incurred by it are overestimated. The main
reason of setting up the budgetary slack is to increase the motivation of the employees to

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perform better than the actual budgeted goals (De Baerdemaeker, Jolien, and Werner
Bruggeman 2015). There are different sets of advantages and disadvantages of setting a
budgetary slack by an entity. The business unit managers also suffer from these. The
budgetary slack could encourage the employees in a division to work at a efficiency level
lower than their actual efficiency level. This would fail to motivate the employees to
work more than they are required to do so. This will also limit the performance of the
managers who tend to contribute more without a defined limit to measure their
performance. Lack of expectations make it difficult for the managers to obtain sufficient
support from any part of the organisation. Hence, due to the lack of support from the
higher management, the performance of the managers also gets impacted in the long run.
Despite a high level of performances from the managers, the presence of a budgetary
slack will always tend to show them as underperforming in comparison to the budgeted
levels set by them (Azar et al. 2016). Hence, the uncertainty prevailing in relation to the
measurement of their performance tends to increase due to the lack of idea about the
actual performance levels of the entity.
B. The presence of a budgetary slack not only affects the managers but also impacts the
entity as a whole. The burden of this lack of performance falls on the corporate
management as well. One of the aspects on which the burden of the budgetary slack falls
is the reporting to the investors. The performance of a company is measured on the basis
of the performance of its competitors. Hence, reports relating to the budgetary slack
remain irrelevant to the investors (Rifqi et al. 2017). In case of an entity looking to
expand its business in the long run, budgetary slack does not help the purpose of the
corporate management. This is because the entity tends to usually perform below the

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expected level due to the presence of a budgetary slack. Hence, the inefficiency on the
part of the employees results in the entity not being able to meet the performance levels
required for the quicker growth of the business. For a business looking to project itself as
a fast growing one, the budgetary slack tends to negatively impact its prospects. The
third aspect which can be classified as a disadvantage of budgetary slack over an
extended period of time is that it tends to negatively impact the profitability of the
business in the long run (Fanani, Zaenal and Georgina 2018). If the other competitor
firms become more aggressive and report higher profit levels, then it becomes difficult
for the business to position itself as a competitively profitable entity.

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References
Armitage, Howard M., Alan Webb, and John Glynn. "The use of management accounting
techniques by small and medium‐sized enterprises: a field study of Canadian and Australian
practice." Accounting Perspectives 15, no. 1 (2016): 31-69.
Azar, Adel, Nooshin Rahmani, and Ameneh Khadivar. "The impact of budgetary slack on
performance-based budgeting." Актуальні проблеми економіки 10 (2016): 397-412.
Bandiera, Oriana, Luigi Guiso, Andrea Prat, and Raffaella Sadun. "Matching firms, managers,
and incentives." Journal of Labor Economics 33, no. 3 (2015): 623-681.
De Baerdemaeker, Jolien, and Werner Bruggeman. "The impact of participation in strategic
planning on managers’ creation of budgetary slack: The mediating role of autonomous
motivation and affective organisational commitment." Management Accounting Research 29
(2015): 1-12.
Fanani, Zaenal, and Georgina Elizabeth K. Saudale. "Influence of Information Asymmetry and
Self-Efficacy on Budgetary Slack: An Experimental Study." Jurnal Akuntansi dan Keuangan 20,
no. 2 (2018): 62-72.
Martynov, Aleksey. "Alliance portfolios and firm performance: the moderating role of firms’
strategic positioning." Journal of Strategy and Management (2017).
Rifqi, Robith Abdullah, Imam Subekti, and Aulia Fuad Rahman. "The Effect of Budget
Participation to Budgetary Slack with External Pressure as Moderating Variable." Journal of
Accounting and Business Education 2, no. 1 (2017): 178-201.

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Wicks, Andrew, and Jeffrey S. Harrison. "A practitioner critique of a conceptual paper on
measuring value and performance." Available at SSRN 2590795 (2015).