tools-for-enterprise-performance-evaluation

The vp of operations oversees procurement store

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Unformatted text preview: heavily by the combined profits of each store. The VP of Operations oversees procurement, store management, and catering management. The Procurement Manager oversees purchasing of food and dishware. o The Procurement activities are evaluated as cost centers, relying on budgets and standard costs to control activities. The Store and Catering managers oversee supervisors from each location. o The Store and Catering Managers are responsible for producing profits, and are evaluated accordingly. The VP of Finance is viewed and evaluated as a cost center. The VP of Real Estate is responsible for site acquisition and construction. Although the activities are largely viewed in the context of a cost center, there is an expected rate of return for each new real estate investment. Therefore, the VP of Real Estate is evaluated for cost control and return on investments. Download free ebooks at bookboon.com 10 Responsibility Accounting and Management by Exception Tools for Enterprise Performance Evaluation 1.7 Responsibility Center Reports A company’s accounting system should support preparation of an accounting report for each responsibility center. This information is essential to monitor, control, and direct each business unit. The exact form and detail of a performance report depends on the particular organization and the nature of the responsibility center. Oftentimes, the reports will provide a comparison between budgeted and actual data, with the difference being reported as a variance from budget. These performance reports should be consistent with the organizational structure of the firm. At successively higher levels within an organization, the reports tend to include less transaction specific detail and more combinations of business units. For Out to Lunch Hamburgers, each store will likely have a customized performance report: P ERFORMANCE REPORT -- STORE LOCATION A FOR THE YEAR ENDING DECEMBER 31, 20X5 A CTUAL RESULTS Percent of Sales S ales: Burgers Fries Drinks Total Sales * Less: Variable Expenses Food Cost Other Variable Expenses Total Variable Expenses Contribution Margin Less: Traceable Fixed Costs Location A Margin BUDGETED RESULTS VARIANCE Totals Percent of Sales Totals 4 0% 24% 36% 100% $ 1,000,000 600,000 900,000 $2,500,000 4 3% 22% 35% 100% $ 1,100,000 550,000 875,000 $2,525,000 $ ( 100,000) 50,000 25,000 $ (25,000) 1 9% 7% 26% $ 4 75,000 175,000 $ 650,000 2 0% 8% 28% $ 5 05,000 200,000 $ 705,000 $ ( 30,000) (25,000) $ (55,000) $1,820,000 1,100,000 $ 720,000 $ $1,850,000 1,100,000 $ 750,000 $ Drinks (36%) B urgers (40%) Fries (24%) 30,000 30,000 Download free ebooks at bookboon.com 11 Responsibility Accounting and Management by Exception Tools for Enterprise Performance Evaluation Please click the advert You’re full of energy and ideas. And that’s just what we are looking for. © UBS 2010. All rights reserved. Notice that Location A’s performance report is very detailed, and provides a basis for analysis of numerous facets of the...
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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.

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