Management Control Systems and Responsibility Accounting - PowerPoint PPT Presentation

Loading...

PPT – Management Control Systems and Responsibility Accounting PowerPoint presentation | free to download - id: 44143c-MGUwM



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Management Control Systems and Responsibility Accounting

Description:

Introduction to Management Accounting Management Control Systems The Management Control System Setting Goals, Objectives, and Performance Measures Organizational ... – PowerPoint PPT presentation

Number of Views:831
Avg rating:3.0/5.0
Slides: 40
Provided by: Olga69
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Management Control Systems and Responsibility Accounting


1
Introduction to Management Accounting
2
Chapter 9
Introduction to Management Accounting
Management Control Systems And Responsibility
Accounting
3
Management Control Systems
Learning Objective 1
This is a logical integration of techniques for
gathering and using information.
Motivating
Planning and control
Evaluating
4
The Management Control System
A Set goals, targets
B Plan and execute
D Evaluate, reward
C Measure, Monitor, report
5
Setting Goals, Objectives, and Performance
Measures
Top management develops organization-wide goals,
measures, and targets. They also identify the
critical processes needed to achieve the goals.
Top management and critical process
managers develop key success factors and
performance measures. They also identify specific
objectives.
Critical process managers and lower-level managers
develop specific performance measures for each
objective.
6
Organizational Goals
Goals provide a long-term framework around
which an organization will form its comprehensive
plan for positioning itself in the market.
7
Key Success Factors
Key success factors are characteristics
that managers must achieve in order to drive the
organization toward its goals.
8
Identifying Responsibility Centers
Learning Objective 2
A responsibility center is a set of
activities assigned to a manager, a group
of managers, or other employees.
System designers apply responsibility accounting
to identify what part of the organization has
responsibility for each action.
9
Identifying Responsibility Centers
Cost centers
Profit centers
Investment centers
10
Developing Performance Measures
Learning Objective 3
  • Effective performance measures will
  • Reflect key actions and activities that relate to
    organizations goals
  • Be affected by actions of managers and employees
  • Be readily understood by employees
  • Balance long-term and short-term concerns
  • Be reasonably objective and easily measured
  • Be used consistently and regularly

11
Nonfinancial Measures of Performance
ATT Universal Card Services uses 18 performance
measures for its customer inquiries process.
These measures include average speed of answer,
abandon rate, and application processing time.
12
Nonfinancial Measures of Performance
Often the effects of poor nonfinancial performance
do not show up in the financial measures until
considerable ground has been lost.
Financial measures are often lagging indicators
that arrive too late.
13
Monitoring and Reporting Results
Feedback and learning are at the center of the
management control system.
At all points in the planning and control
process, it is vital that effective communication
exists among all levels of management and
employees.
14
A Successful Organization and Measures of
Achievement
FINANCIAL STRENGTH Product profitability EBIT
CUSTOMER SATISFACTION Market share, Survey
scores, Complaints
BUSINESS PROCESS IMPROVEMENT Cycle time, Defects,
Activity costs
ORGANIZATIONAL LEARNING Training time, Turnover,
Staff satisfaction score
15
Goal Congruence, Managerial Effort, and Motivation
Learning Objective 4
Goal congruence is achieved when employees,
working in their own perceived best interests,
make decisions that help meet the overall goals
of the organization.
Managerial effort must accompany goal congruence.
16
Goal Congruence, Managerial Effort, and Motivation
Managerial effort is exertion toward a goal or
objective.
Planning
Supervising
Thinking
17
Goal Congruence, Managerial Effort, and Motivation
Motivation is a drive toward some selected goal.
It creates action toward that goal.
It creates effort.
18
Controllability and Measurement of Financial
Performance
Management control system
19
Controllability and Measurement of Financial
Performance
An uncontrollable cost is any cost that cannot be
affected by the management of a responsibility
center within a given time span.
Controllable costs include all costs that
a managers decision and actions can influence.
20
Contribution Margin
The contribution margin is especially helpful for
predicting the impact on income of short-run
changes in activity volume.
Managers may quickly calculate any
expected changes in income by multiplying
increases in dollar sales by the contribution
margin ratio.
21
Segments
Learning Objective 5
Segments are responsibility centers for which a
company develops separate measures of revenues
and costs.
Retail Grocery Company
West Division
East Division
Meats
Produce
Groceries
Meat Store 2
Meat Store 1
22
Retail Grocery Company
23
The Balanced Scorecard
Learning Objective 6
A balanced scorecard is a performance measurement
and reporting system that strikes a balance
between financial and operating measures.
It links performance to rewards.
It gives explicit recognition to the diversity of
organizational goals.
24
The Balanced Scorecard
Key performance indicators
What are key performance indicators?
They are measures that drive the organization to
achieve its goals.
25
The Balanced Scorecard
The scorecard measures an organizations performan
ce from four key perspectives
Financial
Internal processes
Customers
Employee growth and learning
26
Quality Control
Learning Objective 7
Quality control is the effort to ensure
that products and services perform to
customer requirements.
27
Cost of Quality Report
Prevention
Appraisal
Internal failure
External failure
28
Cost of Quality Report
Prevention costs are the costs incurred
to prevent the production of defective products
or delivery of substandard services.
Appraisal costs are the costs incurred
to identify defective products or services.
29
Cost of Quality Report
Internal failure costs are the costs of
defective components and final products or
services that are scrapped or reworked.
External failure costs are the costs caused
by delivery of defective products or services to
customers, such as field repairs, returns, and
warranty expenses.
30
Quality-Control Chart
The quality-control chart is a statistical plot
of measures of various product dimensions or
attributes.
This plot helps detect process deviations before
the process generates defects.
31
Quality-Control Chart
32
Six Sigma
What is six sigma?
It is a continuous process improvement effort
designed to reduce costs by improving quality.
It has broadened into a general process to define
and measure a process, analyze it, and improve it
to minimize errors.
33
Control of Cycle Time
Cycle time, or throughput time, is the time taken
to complete a product or service, or any of the
components of a product or service.
The longer a product or service is in process,
the more costs it consumes.
34
Control of Productivity
Productivity is a measure of outputs divided by
inputs.
Outputs Inputs
Productivity
Productivity measures vary widely according to
the type of resource with which management is
concerned.
35
Control of Productivity
How should outputs and inputs be measured?
Labor-intensive organizations are concerned with
increasing the productivity of labor, so
labor- based measures are appropriate.
36
Measures of Productivity
37
Service, Government, and Nonprofit Organizations
Learning Objective 8
Most service, government, and nonprofit organizati
ons have more difficulty implementing
management control systems.
Outputs of service and nonprofit organizations
are more difficult to measure than are the cars
or computers that are produced by manufacturers.
38
Future of Management Control Systems
A changing environment often means that
organizations must set different goals or or key
success factors.
Different goals create different actions and
related targets.
39
The End
End of Chapter 9
About PowerShow.com