Term
|
Definition
| organization unit that is headed by a manager who is responsibility for its activities |
|
|
Term
|
Definition
| ratio of outputs to inputs, Ex. X is more efficient than Y, not X is 80% effecient. |
|
|
Term
Efficiency
Efficient if (2)
Flaws (2) |
|
Definition
Efficient if
1. uses < resources, products same output
2. uses same resources, greater output
Flaws:
1. Recorded costs are not precise measures of resources consumed
2. Std is only an approximation |
|
|
Term
|
Definition
| relationship between a responsibility center's output and its objectives. Efficient if it does things right and effective if it does the right things. |
|
|
Term
| Types of responsibility centers (4) |
|
Definition
1. Revenue
2. Expense
3. Profit
4. Investment |
|
|
Term
|
Definition
| output (revenue) measured in monetary terms, no formal attempt to related revenue to expenses. Actual sales are measured against budgets. |
|
|
Term
Expense
2 types of expense centers |
|
Definition
inputs are measured in monetary terms, outputs are not. 2 types of costs
1. Engineered: right amount can be estimated with reasonably reliability.
2. Discretionary: no estimate, depends on mgmt judgment. |
|
|
Term
| Engineered expense centers (3) |
|
Definition
1. Input can be measured in monetary terms
2. output can be measured in physical terms
3. optimum $ amt of input required ot produce one unit of output can be determined. |
|
|
Term
| Discretionary expense centers |
|
Definition
administrative and support units. outputs cannot be measured in monetary terms.
Most difficult to measure: R&D, marketing, then admin. |
|
|
Term
|
Definition
Order getting - advertising
Order filling - logistics.
Adv. - discretionary
Log. - engineered |
|
|
Term
|
Definition
| measures both revenues and costs |
|
|
Term
|
Definition
| matches revenues and costs against assets |
|
|
Term
Planning function
Incremental budgeting |
|
Definition
Current level of expenses is sued as a starting point, then adjusted for inflation, etc.
2 drawbacks
1. current expenditures are not re-examined, just accepted
2. Mgrs tend to want more $, and request additional resources, OH tends to increase. |
|
|
Term
Planning function
Zero-based review |
|
Definition
thorough analysis on a rolling schedule, every 5 years. Start from scratch.
Drawbacks:
1. time consuming
2. overwhelming for mgs involved |
|
|
Term
| Types of financial control (2) |
|
Definition
1. Engineered - become cost competitive and set a std cost. Efficiency
2. Discretionary: allow mgr to participate and use judgment to control costs. Financial control is exercised at the planning stage, before costs are incurred. |
|
|
Term
| Admin and support center control problems (2) |
|
Definition
1. difficulty measuring output
2. lack of goal congruence. Empire building or safeguarding a position without regard to the welfare of the entire org. |
|
|
Term
| 3 types of marking activities |
|
Definition
1. order filling/logistics - engireered.
2. revenue generation: compare actual revenue with qties sold. budgeted with actual units.
3. order getting: true marketing costs - discretionary. |
|
|
Term
|
Definition
1. Casual and direct: raw material becomes part of a FG. Control focuses on using the minimal input to produce the output.
2. Ambiguous: relationships between increased $ spent and outputs are rarely comparable. |
|
|
Term
| Zero-based reviews AKA (4) |
|
Definition
1. Downsizing
2. Rightsizing
3. Restructuring
4. Process reengineering. |
|
|
Term
|
Definition
1. Basic costs
2. Discretionary costs
3. Explain proposed increases |
|
|
Term
| Difficulties with R&D measurement (2) |
|
Definition
1. Unplanned
2. Time lapse between research and product launch |
|
|
