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Chapter 22, 6, & 16b - Decentralization, Organization Structure, and Responsibility Accounting

Chapter 22, 6, & 16b - Decentralization, Organization Structure, and Responsibility Accounting

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Chapter 22 – Management Control Systems (Pgs 769-773) I. Management Control Systems a. Management Control System: i. Means of gathering and using information to aid and coordinate the planning and control decisions throughout an organization and to guide the behavior of its managers and other employees b. Balance Scorecard Perspectives: i. Financial Perspective: 1. Stock price, net income, ROI, cash flow from operations, etc ii. Customer Perspective: 1. Customer satisfaction, customers’ repeat purchases, time taken to respond to customer requests, etc iii. Internal-Business-Process Perspective: 1. Quality, speed of service, friendliness of employees, etc iv. Learning-and-Growth Perspective: 1. Employee satisfaction, absenteeism, etc c. Target performance levels are based on competitor benchmarks, which indicate the performance levels necessary to meet customer needs, compete effectively, and achieve financial goals II. Evaluating Management Control Systems a. Management control systems should be closely aligned with the company’s strategies and goals b. Management control systems should also be designed to support the organizational responsibilities of individual managers i. Different levels of management need different kinds of information to perform their tasks c. Effective management control systems should also motivate managers and other employees
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i. Motivation: 1. Desire to attain a selected goal (goal-congruence aspect) combined with the resulting pursuit of that goal (the effort aspect) a. Goal Congruence exists when individuals and groups work toward achieving the organization’s goals b. Effort is exertion toward achieving a goal i. Goes beyond physical exertion to include both physical and
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