tailieunhanh - Lecture Fundamentals of cost accounting - Chapter 14: Business unit performance measurement
We described the organization of the firm in chapter 12 by referring to responsibility centers: cost centers, profit centers, and investment centers. In this chapter, we develop and analyze performance measures for investment centers. Recall that in an investment center, managers have responsibility for asset deployment in addition to revenue and cost responsibilities. | Business Unit Performance Measurement Chapter 14 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin We described the organization of the firm in Chapter 12 by referring to responsibility centers: cost centers, profit centers, and investment centers. In this chapter, we develop and analyze performance measures for investment centers. Recall that in an investment center, managers have responsibility for asset deployment in addition to revenue and cost responsibilities. Accounting Income . 1 Evaluate divisional accounting income as a performance measure. Divisional Income: Division revenues minus division costs Investors use accounting income to assess a firm's performance. Firms use a division’s income to assess divisional performance. 14 - Because divisions have both revenue and cost responsibility, an obvious performance measure is simply divisional income. Investors use income to assess a firm’s performance; so, it is natural for the firm to consider the division’s income to assess divisional performance. Divisional Income LO1 Mustang Fashions Divisional Income Statements For Year 1 ($000) Sales Cost of sales Gross margin Allocated corporate overhead Local advertising Other general and administrative Operating income Tax expense (@ 30%) After-tax income $5, 2, $2, 1, $ $ $2, 1, $1, $ $ $8, 4, $3, 1, $ $ Western Division Eastern Division Total 14 - Divisional income generally follows accounting income. Let’s review Mustang Fashions. Mustang Fashions is organized into two divisions, based on geographical location, Western and Eastern. Divisional income statements show the Western division with after-tax net income of $336,000 and the Eastern division with after-tax net income of $214,200. Some Simple Financial Ratios LO1 Gross margin percentage Operating . | Business Unit Performance Measurement Chapter 14 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin We described the organization of the firm in Chapter 12 by referring to responsibility centers: cost centers, profit centers, and investment centers. In this chapter, we develop and analyze performance measures for investment centers. Recall that in an investment center, managers have responsibility for asset deployment in addition to revenue and cost responsibilities. Accounting Income . 1 Evaluate divisional accounting income as a performance measure. Divisional Income: Division revenues minus division costs Investors use accounting income to assess a firm's performance. Firms use a division’s income to assess divisional performance. 14 - Because divisions have both revenue and cost responsibility, an obvious performance measure is simply divisional income. Investors use income to assess a firm’s performance; so, it is natural for the
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