Chapter 5: Control System Costs Flashcards
What are direct / out-of-pocket costs?
Direct costs are the monetary costs of implementing a MCS.
They should affect the decision whether it makes sense to implement one or another MCS.
How are indirect costs defined?
Indirect costs are created by side effects or implementation of the wrong type of control
=> tend to be higher than direct costs!
What are the four types of indirect costs?
1.) Behavioural displacement
- results are poorly defined
- focus too much on action => loose sight
- wrong types of employees recruited
2.) Gamesmanship
- creation of slack resources
- data manipulation (falsification, data mgmt.)
3.) Operating delays (can be quite costly)
4.) Negative attitudes
- can be produced by action or results controls
