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
Choose the relationship which best predicts the dependent variable After exploring a diversity of relationships, you should select the one that can best be employed in predicti

BUDGETARY CONTROLS Control in a business is the process of guiding organization into viable patterns of activity in an environment. The main purpose of a control system is to m

Issa Company manufactures a personal computer designed for use in schools and markets it under its own label. Issa has the capacity to produce 25000 units a year but is currently p

Activity based costing versus traditional costing Following are the main differences between activity based costing system and traditional costing system: Explain  1) Und

Question: (a) (I) The following equations relate to the market conditions for pullovers at a given point of time: Demand Function: Q d = 1200 - P Supply Function: Q s


Illustrate the concept of Cost The term cost indicates the amount of expenditure (actual or national) incurred on, or attributable to, a specified thing or thing or cost unit.

What are the limation of semi variable cost and how to overcome it?

The significant objectives of short-term cash forecast are as given: find out operating cash requirement anticipating short term financing Organization investment of

Describe the impact of different types of standards on motivations, and specifically, the likely effect on motivation of adopting the labor standard recommended for Geeta & Company