Unit 9: Performance Evaluation
This unit describes how businesses use managerial accounting to evaluate company performance – for the entire company, their organizational departments, and their individual employees. How do you evaluate the productivity of each division manager in a decentralized company? How well does each division use the company's assets to create profits? Responsibility accounting assumes someone is responsible for every cost the company incurs. They often base the compensation they give their managers on the financial performance of the divisions they manage. We will consider the issues Game Products encounters when it evaluates the performance of three divisional managers who oversee sporting goods, board games, and computer games.
Completing this unit should take you approximately 3 hours.
In this unit, you learned how you can apply management accounting techniques to decentralized organizations. The main focus is how to evaluate "investment centers" using such techniques as the development of a segmented income statement and the application of performance metrics to these segmented accounts. In the next unit, you learn how to prepare a Cash Flow, one of the most vital tools in management accounting.