Responsibility Accounting, Transfer Pricing, BSC Flashcards
End Product of Responsibility Accounting
Is there a standard need to be followed?
End product is Performance Report
No standards like GAAP
Types of Center
What is the primary consideration in determining what type of center?
- Cost Center
- Revenue Center
- Profit Center (combination of two)
- Investment Center (highest level)
- Business within a business
- Exist as if another company
- Autonomy
Primary consideration is the responsibility
Secondary is nature of the operation
Explain.
Cost Classification
Controllable vs Non Controllable
Direct (Traceable) vs Indirect (Common)
Direct = C + NC
Indirect = NC
Available to What Type of Center?
Variance Analysis
Cost, Revenue, Profit, Investment Center
Available to What Type of Center?
Segmented Income Statement
Profit and Investment Center
Available to What Type of Center?
ROI, RI, EVA
Investment Center
Basis of Performance
If manager is to be hired or fired
If segment is to be contrinued or dropped
Manager - controllable (performance margin)
Segment - segment margin
ROI
MarTur ROI
Income is ROI is EBIT
Income in ROA is NI
Realistic, Monopolistic, Problematic
If one is high and one is low
- realistic
If both high
- monopolistic
If both low
- problematic
Transfer Pricing
Market price
Negotiated price
Arbitrary price
Cost-based price
- Variable Cost
- Full Cost
- Cost - plus
Limit of Transfer Price
Upper and Lower
Upper
- Purchase price from supplier
Lower (Unit VC + Lost Unit CM)
- Full capacity = SP
- Excess capacity = VC
Lost unit CM is an opportunity cost
Perspective in BSC
Financial and Non Financial
Which is a lagging indicator?
A leading indicator?
- Financial
- Customer
- Internal Business Process
- Learning and Growth
Financial is a lagging indicator
Others are leading indicator
Delivery Cycle (Lead) Time
Wait Time + Manufacturing Cycle Time
Manifacturing Cycle Time = process + inspection + move + queue
