Chapter 9 Managerial Accounting

Balanced Scorecard-a performance measurement and reporting system that strike a balance between financial and operating measures, links performance to rewards and gives explicit recognition to the diversity of organizational goals.

Controllable Cost-any cost that is influenced by a manager’s decisions and actions.

Cost Center-a responsibility center in which a manager is accountable for costs only.

Cost of Quality Report-a report that displays the financial impact of quality.

Cycle Time-the time taken to complete a product or service, or any of the components of a product or service.

Goal Congruence-a condition where employees, working in their own personal interests, make decisions that help meet the overall goals of the organization.

Investment Center-a responsibility center whose success is measured not only by its income but also by relating that income to its invested capital, as in a ratio of income to the value of the capital employed.

Key Success Factor-actions that must be done well in order to drive the organization towards its goals.

Key Performance Indicators-measures that drive the organization to achieve its goals.

Management Control System-a logical integration of techniques to gather and use information to make planning and control decisions, to motivate employee behavior, and to evaluate performance.

Managerial Effort-exertion toward a goal or objective including all conscious actions (such as supervising, planning, and thinking) that result in more efficiency and effectiveness.

Motivation-the drive for some selected goal that creates effort and action toward that goal.

Productivity-a measure of outputs divided by inputs.

Profit Center-a responsibility center for controlling revenues as well as costs (or expenses)-that is, profitability.

Quality Control-the effort to ensure that products and services perform to customer requirements.

Quality-Control Chart-the statistical plot of measures of various product dimensions or attributes.

Responsibility Accounting-identifying what parts of the organization have primary responsibility for each objective, developing measures and targets to achieve, and creating reports of these measures by organization subunit or responsibility center.

Responsibility Center-a set of activities assigned to a manager, a group of managers, or other employees.

Segments-responsibility centers for which a separate measure of revenues and costs is obtained.

Total Quality Management-the application of quality principles to all of the organization’s endeavors to satisfy customers.

Uncontrollable Cost-any cost that cannot be affected by the management of a responsibility center within a given time span.