Chapter 12 - Responsibility accounting, operational performance measures, and the balanced scorecard. After completing this chapter, you should be able to: Explain the role of responsibility accounting in fostering goal congruence, define and give an example of a cost center, a revenue center, a profit center, and an investment center; prepare a performance report and explain the relationships between the performance reports for various responsibility centers,...
Trang 1Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard
Chapter 12
Trang 3Responsibility Centers
A subunit in an organization whose manager is
held accountable for specified financial
results.
A subunit in an organization whose manager is
held accountable for specified financial
results.
Trang 4Responsibility Centers
Cost Center
S egment has control over the incurrence of costs.
Cost Center
S egment has control over the incurrence of costs.
a unit.
Revenue Center
Segment
is responsible for the revenue of
a unit.
The Reservations Department of an airline.
Trang 5Responsibility Centers
Profit Center Segment has control
over both costs and
revenues.
Segment has control
over both costs and
and invested capital.
Investment Center
Segment has control over profits
and invested capital.
A division of a large corporation.
Trang 6Performance Reports
Show the budgeted and actual amounts, and the variances between
these amounts, of key financial results appropriate for the type of
responsibility center.
Show the budgeted and actual amounts, and the variances between
these amounts, of key financial results appropriate for the type of
responsibility center.
Trang 7Diamond Head Lodge 2,100 4,500 2,050 4,430 50 U 70 U
Waikiki Sands Hotel 4,110 8,747 4,136 8,770 26 F 23 F
Waikiki Sands Hotel
Housekeeping and Custodial (40) (90) (41) (90) 1 U —Recreational Services 40 85 41 88 1 F $ 3 F Hospitality 2,800 6,000 2,840 6,030 40 F 30 F
Food and Beverage 1,355 2,842 1,340 2,832 15 F 10 U
Food and Beverage Department
*Numbers without parentheses denote profit; numbers with parentheses denote expenses; numbers in thousands.
†F denotes favorable variance; U denotes unfavorable variance.
Flexible Budget* Actual Results* Variance†
Trang 8Cost Allocation
The process of assigning the costs in the cost pool
to the cost objects is called cost allocation or cost
distribution.
Trang 9Cost Allocation Bases
An allocation base is
a measure of activity,
physical characteristic, or
economic characteristic that is associated with the responsibility centers, which are the cost objects in the allocation process.
Trang 10Activity-Based Responsibility Accounting
Traditional responsibility-accounting systems tend to focus on the financial performance measures of cost, revenue, and profit for subunits of the organization.
Activity-based costing systems associate costs
with the activities that drive those costs In
activity-based responsibility accounting, attention is directed not only to costs incurred but also to the
activity creating the cost.
Activity-based costing systems associate costs
with the activities that drive those costs In
activity-based responsibility accounting, attention is directed not only to costs incurred but also to the
activity creating the cost.
Trang 11Behavioral Effects of Responsibility
Trang 12Segmented Reporting
Segmented reporting refers to the preparation of accounting reports by segment and for the
organization as a whole.
A segment is any part or activity of an organization about which a manager seeks
cost, revenue, or profit data
Trang 14Segmented Reporting
Trang 15Key Features of Segmented
Reporting
Contribution format.
Controllable versus uncontrollable expenses.
Segmented income statement.
Trang 16Customer Profitability Analysis
and Activity-Based Costing
Let’s see, I need
Special credit terms ,
Special packing,
Great field service , and JIT delivery.
We can handle that - but we need
to quote a price that reflects the value
of these services.
Company Sales Rep Customer
Trang 17Operational Control Measures in
Today’s Manufacturing Environment
Trang 18Operational Performance Measures in
Today’s Manufacturing Environment
Raw Material & Scrap
Control Quality
Lead time
Cost of scrap
Total cost
Inventory Control Average value
Average holding time Ratio of inventory
value to sales revenue
Trang 19Operational Performance Measures in
Today’s Manufacturing Environment
Customer complaints Defective products Cost of rework
Trang 20Operational Performance Measures in
Today’s Manufacturing Environment
Trang 21Operational Performance Measures in
Today’s Manufacturing Environment
Productivity Aggregate productivity
Partial productivity
Innovation and
Learning Percentage of sales from new products Cost savings from process improvements
Trang 22Balanced Scorecard
The balanced scorecard is a balanced
approach to the area of performance evaluation
Employees are evaluated on a series of financial
and nonfinancial measures in a variety of areas.