Management Control System

Management Control System Author: Manohar Prasad

3. BEHAVIOR IN ORGANIZATION Learning outcomes ,[object Object],[object Object],[object Object],[object Object],[object Object]

Organization Structure ,[object Object],[object Object],[object Object],[object Object],11/21/11 0

TYPES OF ORGANIZATIONS ,[object Object],[object Object],[object Object]

Five Approaches to Structural Design 11/21/11 0

FUNCTIONS OF THE COTROLLER ,[object Object],[object Object],[object Object],[object Object]

FUNCTIONS OF THE CONTROLLER(contd.) ,[object Object],[object Object],[object Object],[object Object]

4. RESPONSIBILITY CENTERS Learning outcomes ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

THE CONTROLLER ,[object Object],[object Object],[object Object],[object Object],[object Object]

RESPONSIBILITY CENTRES ,[object Object],[object Object],[object Object]

RESPONSIBILITY CENTRES ,[object Object],[object Object],[object Object],[object Object]

RESPONSIBILITY CENTRES ,[object Object],[object Object],[object Object],[object Object],[object Object]

TYPES OF RESPONSIBILITY CENTRES ,[object Object],[object Object],[object Object],[object Object]

TYPES OF RESPONSIBILITY CENTRES ,[object Object],[object Object],[object Object]

Responsibility Accounting for Profit Centres ,[object Object],[object Object],[object Object]

Profit Centre ,[object Object],[object Object],[object Object],[object Object],[object Object]

Advantages of Profit Centre ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Measuring Profitability ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Investment Center ,[object Object],[object Object],[object Object]

6. Transfer Pricing Learning outcomes ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Need For Transfer Pricing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

OBJECTIVES OF TRANSFER PRICES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Goal Congruence ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Transfer Price Defined ,[object Object]

Transfer Pricing ,[object Object]

Transfer Pricing ,[object Object],[object Object],Transfer prices do not affect revenues and costs of the company as a whole Transfer prices do affect revenues and costs of the divisions involved.

Pricing for Internal Providers of Goods and Services ,[object Object]

Methods of calculating transfer price ,[object Object],[object Object],[object Object],[object Object]

Cost Based Pricing ,[object Object],[object Object],[object Object],[object Object],[object Object]

Market Based Pricing ,[object Object],[object Object],[object Object],[object Object],[object Object]

Negotiated Transfer Price ,[object Object],[object Object],[object Object],[object Object],This approach allows for cost recovery while still allowing the selling division to return a profit

Administration of TRANSFER PRICES ,[object Object],[object Object],[object Object],[object Object],[object Object]

Transfer Pricing in Multinational Settings ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

7.Measuring & Controlling Assets Prof.S.G.Patwardhan

Measuring & Controlling Assets ,[object Object],[object Object]

Characteristics of long-term assets ,[object Object],[object Object],[object Object],[object Object]

Why relate profits to investments? ,[object Object],[object Object],[object Object]

Responsibility Accounting ,[object Object],[object Object],[object Object],[object Object],[object Object]

Measuring the Performance of Investment Centres ,[object Object],[object Object],[object Object]

Accounting-Based Performance Measures ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],Effectiveness vs Efficiency

[object Object],[object Object],[object Object],[object Object],Effectiveness vs Efficiency

Return on Investment (ROI) ROI is an accounting measure of income divided by an accounting measure of investment

ROI ,[object Object],[object Object],[object Object]

A. The Components of ROI ,[object Object],or The breakdown of the formula shows that managers can increase return by more profit and/or generating more sales for each investment dollar. ROI = Income Invested capital ROI = Income Sales x Sales Invested capital Profit Margin Investment Turnover

Measuring the Performance of Investment Centers Margin : portion of sales available for interest, taxes and profit Turnover : how productively assets are being used to generate sales

D. Residual Income (RI) as an Alternative to ROI ,[object Object],[object Object],[object Object],Residual Income (RI) overcomes the underinvestment problem of ROI since any investment earning more than the cost of capital will increase residual income.

Measuring the Performance of Investment Centers ,[object Object],[object Object]

Components of RI ,[object Object],[object Object],[object Object]

Economic Value Added ,[object Object],[object Object]

Measuring the Performance of Investment Centers ,[object Object],[object Object],Total capital employed = capital assets plus other expenditures meant to have a long-term payoff

MVA ,[object Object],[object Object]

Management Control System

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Management Control System

Editor's Notes