This report recommends that no bonuses be awarded to the production department. Responsibility accounting assigns costs, revenues, and profits to those managers who have direct responsibility (Hansen, Mowen, & Guan, 2009). Responsibility accounting forms the basis of assigning responsibility, establishing performance measurements, evaluating performance, and awarding rewards. The production manager is responsible for the costs incurred in the production department. The standard cost and quantities establish the performance measurements. The production manager performance can be evaluated against the standard costs and the variances computed. The variance analysis forms the basis of awarding the bonuses. The variance analysis shows that the ...
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