Question

On page 23 of the textbook, the discussion of Cost Management Systems suggest that currently the focus is on proactive versus reactive management. (Answer in fewer than 100 words, please.) 1. Describe the effect this might have on the way a business such as McDonald's (McDonald's restaurants) determines what items to add to the menu. 2. What role do you expect activity accounting (a type of managerial accounting) has in determining what McDonald's decides to add to the menu?

Answer 1

Answer:

1. Reactive management as the name implies refers to management having an approach of acting only after a problem has occurred while

Proactive management is preventive method of management that prevents problems from happening by acting in advance to avoid their occurrence.

Explanation:

1.

Reactive management as the name implies refers to management having an approach of acting only after a problem has occurred while

Proactive management is preventive method of management that prevents problems from happening by acting in advance to avoid their occurrence.

Applying proactive management to McDonalds, management will be open to new ideas and quickly adapt, from customer feedback and make changes to their menu but in reactive management it will refuse to do so until the customers begin to complain or disappear then it will take measures to repair the damage of lost customers. At what time, making changes to the menu may be coming too late.

2

Activity accounting does not only report financial information but other qualitative information based on the activities of people and departments which is why it is also called responsibility accounting.

Such being applied to Mcdonalds will consider number of clients served per staff or department, number of customer complaints per period etc