Steps of choosing an accounting based performance, Managerial Accounting

Steps of choosing an accounting based performance measure

Consider the overall goal of the organization as a whole. It is important to choose a measure of accomplishment that represents top management goals. Such measures include operating income, net income, Return on investment (ROI), sales, etc.  Determine whether the measure should be maximized or minimized.

1) Select definitions for such items as income and investments (i.e. should income be based on variable or absorption costing? Must central overheads be allocated? should investments consist of total assets, net assets or net worth?)

2) How should items such as income and investments be measured (i.e. should we use historical costs, replacement costs, realizable or current values?)

3) Determine the standards that should be applied (i.e. should all divisions be required to earn the same rate of return on all investments?)

4) What timing of feedback is needed?  Should it be monthly or quarterly?

Posted Date: 12/8/2012 4:52:10 AM | Location : United States







Related Discussions:- Steps of choosing an accounting based performance, Assignment Help, Ask Question on Steps of choosing an accounting based performance, Get Answer, Expert's Help, Steps of choosing an accounting based performance Discussions

Write discussion on Steps of choosing an accounting based performance
Your posts are moderated
Related Questions
Budget Preparation The organization's budget is ready following the acceptance and sanction of the decision packages. Once the budget of organization has been accepted manager


Collection float considers to the gap among the times, payment is made through the customer/debtor and the time while funds are obtainable for use in the company's bank account. In

Replacement cost It is the cost of replacing a material or asset, by purchase from the current market. If an X material was originally purchased @ Rs. 250 per Kg. And know i

Cost Behavior A firm's cost position results from the cost behavior of its value activities. The cost behavior is based on a number of structural factors which influence cost

The Value Chain and Cost Analysis The behavior of a firm's costs and its relative cost position stem from the value activities the firm performs in competing in an industry. A me

Participative Budgets In this approach to budgeting, budgets are developed by lower level managers who then submit them to their superiors. The budgets depend on the lower level

Firms need cash to invest in inventory, receivables and fixed assets and to create payments for operating expenses, so as to increase earnings and sales and make sure the smooth ru

1. Do you think that the tax minimization scheme described to Debbie Kishimoto is in harmony with the ethical behavior that should be displayed by top corpo- rate executives? Wh

Multi-stage decision making under risk (The use of decision trees) Sequencing is concerned with the selection of an appropriate sequence or order of performing a series of jobs