Chapter 8 Performance reports Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya.
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Transcript Chapter 8 Performance reports Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya.
Chapter 8
Performance reports
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
8-1
Performance reports
Responsibility accounting:
A management accounting system that
encourages individuals to work together
towards the achievement of organisational
goals.
Performance reports:
A yardstick which compares actual results
with the budget.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
8-2
Responsibility accounting
Where each division, branch or other subunit is known as a responsibility centre, the
manager of which is accountable for the
performance of the sub-unit.
Responsibility centers:
Cost centre
Revenue centre
Profit centre
Investment centre
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
8-3
Performance reports show any variance that
may arise when actual figures are compared
with budget figures.
Favourable variance (F) means that actual
income is >budgeted income or actual cost is
<budgeted cost.
Unfavourable variance (U) means that
actual income is <budgeted income or actual
cost is >budgeted cost.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
8-4
Significant variances (exceed an
acceptable limit) are investigated by the
manager of the organisational sub-unit.What
is considered significant varies from business
to business.
Reasons for variances are numerous
but fall into two main groups:
1.
2.
are a result of external factors that
management have no control over, and
are a result of internal factors that
management maybe able to change.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
8-5
Objective of responsibility
accounting
Management by exception means that an
appropriate person is notified when there is
a significant deviation from plan.
Performance reports highlight the areas that
need attention.
Major objective is to ensure that the set
targets are achieved at all costs, not trying
to find who is to blame.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Budgeting, second edition, by Banks & Giliberti
Slides prepared by Mya Aronfeld
8-6