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
Hornsby Manufacturing has four categories of overheads. The four categories and the expected overhead costs for each category for next year are as follows:   Maintenance  $140,000

Liquidity ratios Liquidity refers to the ability of concern to meet its current obligations as and when these become due. The short term obligations are met by realizing amount

If a company creates sales to a number of customers on credit terms this will have to wait for two or still three months before its debtors pay that they owe. It means that the deb

THE GAMES ECONOMISTS PLAY It sounds like a sports fan's dream.  In Stockholm on October 11th, three men share a $1m prize for their skill at analyzing games. They are not telev

Two-person, zero-sum games Two players X & Y have two alternatives. They show their choices by pressing two types of buttons in front of them but they cannot see the opponents

INVENTORY CONTROL The activities of a business during a financial year combine investment projects in progress with new projects commencing and others terminate within the year

MAKE OR BUY DECISIONS (NO LIMITING FACTORS) The choice between making and buying a given component is one which is likely to face all businesses at some time.  It is often one

The subsequent short-term investment opportunities are obtainable to companies in India to invest their temporary cash excess. a) Treasury Bills: Treasury Bills are short-term

Full Service Non Recourse: in this method the book debts are purchased through the factor assuming 100 percent credit risk. In case of default through the debtor the whole risk is

Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant by the year. These brackets are purchased from a supplier 100 miles