Question

Bonus (1 pt) You are preparing the budget submission for the coming year for your organization. It goes to the company headquarters for review, however, you know from past experience, that whatever you have submitted has been accepted and incorporated into the company's overall budget. One of your budget lines is material cost. You feel fairly confident that material costs per ton are going to go down over the next year. They could stay the same, but your best guess is a decline in material costs. Your bonus is tied to whether you meet or are below your forecast budget. The bonus amounts of your key supervisors is also correlated with your bonus. The higher your bonus, the higher the bonuses of those supervisors working for you. Do you make your material budget line reflect your estimate of lower per unit costs or submit the costs for last year (which is still a possibility)? Why? need to give your ce

Answer 1

Yes we will try to reduce material cost budget for the upcoming years, as reduction is cost of material budget will increasee the overall efficiency of operatons that take place in the organization. without compromising with quality of product we will try to reduce the cost of material and related aspects. material cost is prime important to any cost centre and their profitability too. cost of material also fetch the cost of other factor like labor and machines depreciation and repairment. as a examiner i will try to take help of supervisor to reduce the material cost as bonus is directly related to less cost of material. it will motivate us to do plan for future material budget properly. further material cost is linked with other factors too like availability of raw mateiral in market, their quality, their procurement area all fetch cost of storing and carrying. if we are sufficiently able to get the material in adequate price and make the budget taking other factor into consideration than this will be helpful for us to estimate lower per unit cost or else based on current market.