You also probably would track total purchases and

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You also probably would track total purchases and total labor costs. In this business, purchases of food items and supplies and labor represents the bulk of your variable costs. Similar to sales, these items can be compared to the budget, with any significant deviations being followed up. Finally, by tracking sales, purchases, and labor costs, you monitor your weekly contribution margin; again, this enables you to assess any increases or decreases relative to the budget. Non-Financial Performance Measures: Here, you probably would track things like customer complaints and employee absenteeism/turnover (complaints and absent employees are early warning signs that something is wrong). You also might track materials usage, which is important both to ensure that customers are not getting short-changed in the amount of food served and to prevent pilferage. Finally, you would track the cleanliness of the restaurant and facilities and assure general adherence to daily procedures (e.g., employees wear gloves, all doors are locked at days end, counters are wiped down). b. Non-financial measures are more immediate (timely) and actionable (specific); they ensure that people are doing what they are supposed to be doing and that processes are performing as expected. Such measures can help identify and correct problems before they become severe (e.g., for a sports analogy, if players are not showing up for practice, this decreases the chances of doing well). Balakrishnan, Managerial Accounting 1e FOR INSTRUCTOR USE ONLY 8-18
Financial measures tend to be more aggregate in nature; they are excellent summary measures showing how a business has performed for a given period of time. These measures allow us to quickly assess whether the business is on track or in need of help (similar to the win-loss record of a sports team). The two types of measures clearly are related. For example, employee absenteeism would show up eventually in the financial statements both in the form of reduced sales and increased staffing cost. Tracking absenteeism directly allows for immediate identification of problem employees with a ready-made solution. 8.44 The performance measures at Darjeeling Tea are non-financial and output-based for pickers because there is a strong relation between input and output; more time spent picking translates to more tea leaves picked. Additionally, output is easily measured at the individual level since pickers work alone. There is no need to specify start and stop times or output quotas because workers have strong incentives to maximize their productivity (output) – doing so maximizes their personal income. Thus, Darjeeling can let workers decide how much they wish to make; if Darjeeling wishes to increase output, they can simply hire more workers. Finally, pickers have incentives to maintain the long-term viability of the business (e.g., be gentle when picking, not tread on young shrubs, and so on) because they will be returning to the same estate every day for work. In other words, if they damage a tea shrub, they

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