Management and cost accounting

1. Which of the McGregor theories about human behaviour most closely accords with your own view of human behaviour? Explain the reasons for your choice.

2. What are the implications for management and cost accounting if it is assumed that agency theory accurately describes managerial motivation?

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The quotation from Perrow’s (1973) paper given in the chapter characterises organisations in two distinct ways: what Perrow refers to as the ‘mechanical’ and ‘human relations’ school of thinking.

Identify which of the two approaches seems more valid to you, and discuss the reasons for your choice.

Barley Brindle produces a single product, Product B. One unit of Product B has a prime cost of €10.20, which included 1 hour of direct labour @ €6.20, and each unit uses 0.5 hours of machine time. Estimated production of B in 2008 is 60 000 units. Total production overheads are estimated at €218 000. Required: calculate the overhead recovery rates (to the nearest cent) for 2008, based on:

i) directlabour hours

ii) machine hours

iii) units of production.

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