Week Six: MACS Design with Behavioral Considerations; Ethics; Production Budget Analysis
Exercise #1 MACS design motivation
Answer should be no more than 400 words and adhere to the West Writing Style Handbook. Explain why an understanding of human motivation is essential to MACS design. Exercise #2 Ethical issues
Answer should be no more than 200 words and adhere to the West Writing Style Handbook. Suppose you are the chief executive officer of a manufacturing firm that is bidding on a government contract. In this situation, the firm
with the lowest bid will win the contract. Your firm has completed developing its bid and is ready to submit it to the government when
you receive an anonymously sent packet containing a competitor’s bid that is lower than yours. If your firm loses the bid, you may
need to lay off some employees, and your profits will suffer. What are some possible options in this situation, what are the possible
consequences, and what would you do? Exercise #3 Master budget
Answer the questions below. Be sure to show all work. Adams Company, a merchandising firm that sells one product, estimates it will sell 12,000 units of its product at $60 per unit in
December. In November, the company prepared other information to prepare a budget for December, as shown here:
Merchandise inventory, December 1
Desired merchandise inventory for December 31
Cost per unit of merchandise purchases
Selling and administrative expenses
Cash balance, December 1
November sales 2,000 units
3,000 units
$40
$200,000
$30,000
$600,000 • The company estimates that 60% of each month’s sales are collected in the month of sale and that the remaining 40% is
collected in the month after sale.
• The $200,000 of selling and administrative expenses includes $40,000 of depreciation.
• The company pays for half of merchandise purchases during the month of purchase and pays the remainder during the
month following purchase. Estimated merchandise purchases for November are $340,000.
• All other out-of-pocket expenses are paid for in cash. (a) How many units of merchandise will Adams budget to purchase in December? What is
the dollar amount of Adams’ budgeted merchandise purchases for December?
(b) Prepare a budgeted income statement for the month ended December for Adams Company.
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