Responsibility Accounting and Segment Reporting
The CEO at High-End Lifts would like to further the efforts in evaluating aspects of the business and has asked for your help in constructing a
responsibility accounting system to evaluate the managers of the various product lines.
Read the information in the Challenge 8 Workbook to prepare for the challenge assignment. Watch the videos to gain a
stronger understanding of the concepts.
: Create a performance report for each product line,
Task #1 by PL
tab. Use the information provided within the
Produce Line Info
Complete the yellow highlighted sections only.
Task 2 (memo is graded; discussion board post is not graded): Consider the following: Product-line managers are paid a base salary and
a bonus based on achieving the flexible budget profit targets (flexible operating income). The formula for determining the bonus is 2.5% of the
flexible budget operating income if the flexible budget target is reached, 0.5% of amounts over budget and a -5% penalty of amounts under
Which managers would receive a bonus based on the product-line performance report? Which managers would not receive a bonus?
How much is the penalty?
Some managers did not receive a bonus. The reason they didn't reach the budget amount was related to costs that corporate headquarters
allocated to their product line. These managers did not have direct control of this situation. How might the managers respond to not receiving a
bonus based on the principles of responsibility accounting?
Additionally, the premium and lite commercial, product line managers have complained that the elevators and economy, product line managers