porate organization chart you can see how a responsibility accounting system

Porate organization chart you can see how a

This preview shows page 4 - 6 out of 10 pages.

porate organization chart, you can see how a responsibility accounting system worksperformance-based pay - the linking of employee compensation to the achievement of measur-able business targetsperformance management and evaluation system - a set of procedures that account for and report on both financial and nonfinancial performance so that a company can identify how well it is do-ing, where it is going, and what improvements will make it more profitableperformance measurement - the use of quantitative tools to gauge an organization’s performance in relation to a specific goal or an expected outcome; for it to succeed, managers must be able to distinguish between what is being measured and the actual measures used to monitor perform-anceprofit center - a responsibility center whose manager is accountable for both revenue and costs and for the resulting operating income; performance is usually evaluated by comparing the fig-ures on its actual income statement with the figures on its master or flexible budget income state-mentresponsibility accounting - an information system that classifies data according to areas of re-sponsibility and reports each area’s activities by including only the revenue, cost, and resource categories that the assigned manager can control; used by many organizations to assist in per-formance management and evaluationresponsibility center - an organizational unit whose manager has been assigned the responsibility of managing a portion of the organization’s resources; the activities of a responsibility center dic-tate the extent of a manager’s responsibilityrevenue center - a responsibility center whose manager is accountable primarily for revenue and whose success is based on its ability to generate revenue; performance is usually evaluated by comparing its actual revenue with its budgeted revenue and analyzing the resulting variancesvariable costing - a method of preparing profit center performance reports that classifies a man-ager’s controllable costs as either variable or fixed; produces a variable costing income statement instead of a traditional income statement (also called a full costing or absorption costing or tradi-tional income statement), which is used for external reporting purposes; under variable costing, direct materials costs, direct labor costs, and variable overhead costs are the only cost elements used to compute variable cost of goods soldasset turnover - the ratio of sales to average assets invested; it indicates the productivity of assets, or the number of sales dollars generated by each dollar invested in assets; one of two important indicators of perfomance
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economic value added (EVA) - the shareholder wealth created by an investment center; an indic-ator of performance; calculation can be quite complex because it makes various cost of capital and accounting principles adjustmentsprofit margin - the ratio of operating income to sales; it represents the percentage of each sales
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