Anthony Burkhardt's Ch24PowerPoint

Exception focusoftopmanagementsreviewofabudgetreport

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Unformatted text preview: ant range Chapter 24-3 Flexible Budget Reports -- Example Flexible Budget Reports Example Chapter 24-4 Management by Exception Management by Exception Focus of top management’s review of a budget report: differences between actual & planned results differences results Able to focus on problem areas Investigate only materiality & controllability exceptions, use controllability these guidelines: these Express materiality as a percentage difference from budget ­ materiality as a percentage difference from budget ­ either over or under budget Controllability of items controllable by managers Involves accumulating and reporting costs on the basis of the manager who has the authority to make the day­to­day decisions about the items Means a manager's performance is evaluated on the matters directly directly under the manager's control control Chapter 24-5 The Concept of Responsibility Accounting The Concept of Responsibility Accounting Responsibility center ­ any individual who has control and is Responsibility center accountable for activities May extend from the lowest levels of management to the top strata of management Responsibility accounting is especially valuable in a decentralized decentralized company, where company control of operations are delegated to many managers throughout the organization Segment– area of responsibility for which reports are prepared Chapter 24-6 Three Types of Responsibility Centers Three Types of Responsibility Centers Cost Center Cost • Managers have authority to incur costs • Managers evaluated on ability to control costs • Usually a production dept. or a service dept. Profit Center – Profit Managers judged on the probability of the center Managers judged on the probability of the center Usually an individual department in a retail store, such as the jewelry department. Investment Center Investment Center ­ Manager evaluated on profitability & the rate of return earned of return earned ­ Often a subsidiary company or a product line ­ Manager able to control or significantly influence investment decisions such as...
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This document was uploaded on 03/23/2014.

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