AMA - Written exam 22 December 2023 (solutions) - Question 1 20 points Q 1 a. Calculate BE quantity: - Studeersnel (2024)

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Question 1 20 pointsQ 1 a.Calculate BE quantity: 10 ,000,000/( 5 ,000-1,800)≈ 3 , 125 BEQZ=(average-beq)/st dev: ( 4 , 000 - 3 , 125 )/ 5 00=- 1 .75 0 p-value=0. 45994. probability of BE(0+0. 459 )=0. 9594 is 95 , 9 %(2p for BEQ, 1p for Z-value, 2p for correct probability)Q 1 b.Profit target: ( 10 ,000,000+1,750,000)/( 5 ,000-1,800)≈ 3 , 672 ( 4 , 000 - 3 , 670 )/ 50 0=-0. 66 p-value=0. 245.Probability of profit target is (0+0. 245 )= 7 4%(2p for BEQ, 3p for probability)Q 1 c.Higher uncertainty is reflected in a higher standard deviation (SD) in these calculations. If the SDincreases, the Z-value will decrease. This implies that compared to calculations with an SD of 500, theprobability to break even will decrease. Higher uncertainty has a negative impact on high probabilities(>50%) and a positive impact on low probabilities (<50%).(2p for impact on SD, 3p for argument that probability of BE decreases)Q 1 d.*In the CVP, with uncertainty only 1 parameter in the model has uncertainty. In a MC, it is possible toassess the impact of multiple uncertainties.*For a CVP, reliable historic data (mean, SD) is necessary. For a MC, no reliable historic data is needed*In a MC, there can be multiple uncertainties interacting with each other.*In the CVP, fixed amounts (price, FC, VC in this example) are used. In a MC, we can work with randomamounts.(3p for first, 2p for second)

Question 2 Value of information 20 points.a. Based on the cost structure and the expectations we get the following pay-off matrix: N1=1,500 (p=0) N2=1,800 (p=0) N3=2,200 (p=0)A 9,100,000 10,600,000 12,600,B 9,050,000 10,640,000 12,760,Expected pay-off for contractor A: 09, 100 ,000+010,600,000+012,600,000=10,550,000.Expected pay-off for contractor B: 09,050,000+010,640,000+012,760,000=10,587,000.Expected costs for A are therefore slightly lower (10,550,000<10,587,000) and A is therefore preferred.(3p for correct pay-off matrix (-1 for each mistake), 2p for right decision)b. The expected pay off with perfect information is: 0 .39,050,000+010,600,000+0*12,600,000=10, 535 ,000.Comparing this number with the lowest costs from 1a) implies that the value of perfect information is 10,550,000-10,535,000=15,000.(3p for expected pay off with perfect information, 2p for the value of this information)c. First provide the regret matrix: N1=1,500 N2=1,800 N3=2,A 5 0,000 0 0B 0 40,000 1 60,The highest regret is 50,000 for alternative A and 160,000 for alternative B. Therefore, A is also the bestdecision if controllers want to minimize the risk to be blamed for the wrong decision.

d. Electrify currently has a maximum number of hours of 1,20 0 ; however, it uses only 950 of these. Thatmeans that investing in more hours for Electrify does not change the production plan. Instead of having 250hours unused (1,200-950), it will have 300 hours of unused hours. Investing in a process that is not thebottleneck (slack is 0) does not lead to higher production numbers.( 3 p for impact on production plan, 2 p for argument that investing in a non-bottleneck source does not change outcomes)Question 4 20 pointsa. Conceptual skills in this setting are the ability to see the organization as a whole. So the controller understands the strategy and how decisions influence this strategy. The controller has a clear idea of interdependencies between organizational units and therefore understands the impact of one part of the organization on performance in another part. When the controller is able to constructively challenge and question assumptions made in the decision making process, or the numbers and meanings reported, it is said that they have strong interpersonal skills. Example: Controllers will be better able to question assumptions, numbers and their interpretations (=interpersonal) when they understand the organization strategy and the impact on different parts of the organization better (=conceptual).(2p for conceptual, 2p for interpersonal, 1p for example)b. When managers are evaluated at the end of the year based on their budget performance, they know what to expect. They have a clear target to steer their decisions, they know which resources they can use (allocation at the start of the budget process), they know what to do to get a positive evaluation, etc. According to the authors, this implies they are in a comfort zone. Although this sounds positive, it also implies that they get somewhat lazy. So they do not necessarily outperform competitors but just need to meet their targets. The idea of BB is that managers become more entrepreneurial (do more outside benchmarking, take more risks, etc.) when they are evaluated afterwards compared to their peers (inside or outside the organization), are able to receive additional resources when new opportunities arise, etc. This brings them in the stretch zone, according to the authors. (3p for arguments why in a comfort zone, 2p for pushing to a stretch zone)c. The results from this paper show that if the new information indicates that the movie was successful in the first weekend (high ranking), that the managers then increase the marketing budget. The amount of uncertainty about the success of the movie decreases and therefore they dare to spend more marketing costs. Alternatively, when the information shows that the movie was not very successful, managers cut the marketing budget because they understand that throwing in more money (increase marketing costs) will likely be a waste of the investment. Alternatively you could also argue that managers will spend more on the marketing budget to make the movie a success. The authors argue that such escalation of commitment does not seem to work in this industry.

(2p for that the marketing budget will be increased, 3p for reason that uncertainty is decreasing afterthis new info)d. Jin and Wu argue that general economic policy uncertainty leads to lower cost stickiness becausemanagers are becoming more negative and therefore a sales decrease is more likely expected to beassessed as a permanent trend. In contrast, if uncertainty is higher due to upcoming elections,managers know that this uncertainty will be resolved at a specified date. Therefore, managers waitwith adjusting the resource/cost levels and hence cost stickiness increases.(3p for first and 2p for second)Question 5 20 pointsa. The authors expect that managers will invest more trees in the CSR program when the measurementbase is expressed in trees than in dollars. If an investment is measured in dollars, managers see this as aregular investment in which costs and benefits should be a tradeoff. The costs are therefore more amplified.Alternatively, when measurement is in amount of trees (even though they know that costs are attached toit), the impact on the community/environment becomes more clear. The results, however, show that thisexpectation only holds when managers score high on SCR engagement (i., doing something well for theenvironment... ) but not if they score low on this characteristic.(3p for measurement base, 2p for manager characteristic)b. Based on data analysis they find that a better implemented strategy in the convenience store indeed leadsto more happy customers. Increased customer satisfaction, however, only increases financial profit whenthe store crew is able to engage with these customers to stimulate them in generating higher sales. So whenstore crew does not score high on sales skills, the impact of more happy customers on store profit is notsignificant.(2p for mentioning the crew variable, 3p for the quality of the (moderating) argument)c. The authors argue that individual audit affiliations are run by partners who have their own profit goals.In addition, engaging in profit shifting could lead to more negative attention of politicians and media(political cost argument). On the other hand, when collaboration between audit firms increases throughthese European networks, it will become easier to shift costs because some services can be outsourcedmore easily. (Examples provided are joint recruitment, IT or data-analytic services)(3p for first argument, 2p for second)d. For each product, the contribution margin per unit emission should be calculated. Based on that, youcan rank the products in terms of attractiveness. The calculations can be found in the next table andshow that the order of attractiveness to optimize the total CM is B, C, and A.(2p for order, 3 for correct calculation)

Appendix 1 : Z-table

Appendix 2: Ln transformations

• 0 -0 0 -0 0 -0. X ln(X) X ln(X) X ln(X)
• 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.
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• 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.- 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.
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• 0 -0 0 -0 0 -0.
• 0 -0 0 -0 0 -0.
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• 0 -0 0 -0 0 -0.
• 0 -0 0 -0.
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• 0 -0 0 -0.
• 0 -0 0 -0 2 0.