Performance Management Flashcards
Partial Productivity Ratio (PPR)
Quantity of output / Quantity of input
= how much of each output unit is produced by each unit of input
Total Factor Productivity Ratio (TFP)
Quantity of output / Cost of all inputs used
= how much of each output unit is produced by total units of input
Contribution margin
Revenue - variable costs
Controllable margin
Revenue - variable costs - controllable fixed costs
Controllable fixed costs
Costs that a manager can influence in less than one year (i.e. advertising and sales promotion)
Contribution by SBU
Revenue - variable costs - controllable fixed costs - noncontrollable fixed costs
Elements of a balanced scorecard
FICA
Financial
Internal business processes
Customer satisfaction
Advancement of innovation and human resource development
Conformance Costs
Costs of ensuring conformance with quality standards are prevention and appraisal costs
Prevention Costs
Prevent the production of defective units
Examples of prevention costs
Employee training Inspection expenses Preventive maintenance Redesign of product Redesign of processes Search for higher quality suppliers
Appraisal Costs
Incurred to discover and remove defective parts before they are shipped to the customer or next department
Examples of appraisal costs
Statistical quality checks
Testing
Inspection
Maintenance of the laboratory
Nonconformance costs
Either internal or external costs
Costs in the form of opportunity costs
Internal failure costs
Costs to cue a defect discovered before the product is sent to the customer
Examples of internal failure costs
Rework costs Scrap Tooling changes Costs to dispute Cost of the lost unit Downtime
