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ACCT2522-Management Accounting for Decision Analysis - Term 1, 2026

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Kombushya is known for its handcrafted drinks that come in uniquely shaped bottles. It sells its drinks exclusively on-line. It has a team of 3 workers who place bottles of drink in specially designed containers for shipping to customers. An average worker can pack about 250 bottles per day. Kombushya wants to ensure that workers are working at maximum efficiency but still placing the bottles into the cartons carefully, because they break easily.

 

It is considering the following incentive scheme: paying each worker $400 per day, plus a $100 bonus each if all three workers can pack a combined daily total of 750 bottles without damaging them.

 

What would Expectancy Theory suggest about the impact of this incentive scheme?

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Actions taken by companies to increase extrinsic motivation may reduce intrinsic motivation.

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Intrinsic motivation can be generated when:

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Organisations may rely on multiple performance measures when designing incentive systems because:

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Extrinsic motivation can be generated when an employee is rewarded with tickets to a sports event for providing outstanding service to customers.

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Sunny is the marketing manager of Umbrella Ltd, an events management company. Sunny is organising an art-by-the-sea outdoor event, and his bonus is based on reaching the targeted number of attendees on the event day (500 attendees). Sunny is worried that there will be very few attendees because the forecast weather is cold and stormy and people may avoid attending outdoor events. Which of the following statements is correct?

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Goal setting theory suggests that:

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Kombushya is known for its handcrafted drinks that come in uniquely shaped bottles. It sells its drinks exclusively on-line. It has a team of 3 workers who place bottles of drink in specially designed containers for shipping to customers. An average worker can pack about 250 bottles per day. Kombushya wants to ensure that workers are working at maximum efficiency but still placing the bottles into the cartons carefully, because they break easily.

 

It is considering the following incentive scheme: paying workers a fixed salary of $500 per day.

 

What would Agency Theory suggest about the impact of this incentive scheme?

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Kombushya is known for its handcrafted drinks that come in uniquely shaped bottles. It sells its drinks exclusively on-line. It has a team of 3 workers who place bottles of drink in specially designed containers for shipping to customers. An average worker can pack about 250 bottles per day. Kombushya wants to ensure that workers are working at maximum efficiency but still placing the bottles into the cartons carefully, because they break easily.

 

It is considering the following incentive scheme: paying workers a fixed salary of $500 per day.

 

What would Goal Setting Theory suggest about the impact of this incentive scheme?

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Organisations can use relative performance measures to:

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