chap013_[管理成本會計(jì)]_CGA_MA1_Managerial_Accounting__management_accounting_課件

1、chap013_管理本錢會計(jì)_CGA_MA1_Managerial_Accounting_management_accounting_課件Segment Reporting, Decentralization, and the Balanced ScorecardChapter 13Decentralization in OrganizationsBenefits ofDecentralizationTop managementfreed to concentrateon strategy.Lower-level managersgain experience indecision-makin

2、g.Decision-makingauthority leads tojob satisfaction.Lower-level decisionsoften based onbetter information.Lower level managers can respond quickly to customers.Decentralization in OrganizationsDisadvantages ofDecentralizationLower-level managersmay make decisionswithout seeing the“big picture.May be

3、 a lack ofcoordination amongautonomousmanagers.Lower-level managersobjectives may notbe those of theorganization.May be difficult tospread innovative ideasin the organization.Cost, Profit, and Investments CentersResponsibilityCenterCostCenterProfitCenterInvestmentCenterCost, profit,and investmentcen

4、ters are allknown asresponsibilitycenters.Cost CenterA segment whose manager has control over costs, but not over revenues or investment funds.Profit Center A segment whose manager has control over both costs and revenues, but no control over investment funds.RevenuesSalesInterestOtherCostsMfg. cost

5、sCommissionsSalariesOtherInvestment Center A segment whose manager has control over costs, revenues, and investments in operating assets. Corporate HeadquartersResponsibility CentersCost CentersInvestment CentersSuperior Foods Corporation provides an example of the various kinds of responsibility ce

6、nters that exist in an organization.Responsibility CentersSuperior Foods Corporation provides an example of the various kinds of responsibility centers that exist in an organization.Profit CentersResponsibility CentersCost CentersSuperior Foods Corporation provides an example of the various kinds of

7、 responsibility centers that exist in an organization.Learning Objective 1Prepare a segmented income statement using the contribution format, and explain the difference between traceable fixed costs and common fixed costs.Decentralization and Segment Reporting A segment is any part or activity of an

8、 organization about which a manager seeks cost, revenue, or profit data. Popular FoodsAn Individual StoreA Sales TerritoryA Service CenterSuperior Foods: Geographic RegionsSuperior Foods Corporation could segment its business by geographic region.Superior Foods: Customer ChannelSuperior Foods Corpor

9、ation could segment its business by customer channel.Keys to Segmented Income StatementsThere are two keys to building segmented income statements:A contribution format should be used because it separates fixed from variable costs and it enables the calculation of a contribution margin.Traceable fix

10、ed costs should be separated from common fixed costs to enable the calculation of a segment margin.Identifying Traceable Fixed Costs Traceable costs arise because of the existence of a particular segment and would disappear over time if the segment itself disappeared.No computer division means . . .

11、No computerdivision manager.Identifying Common Fixed Costs Common costs arise because of the overall operation of the company and would not disappear if any particular segment were eliminated. No computer division but . . .We still have acompany president.Traceable Costs Can Become Common CostsIt is

12、 important to realize that the traceable fixed costs of one segment may be a common fixed cost of another segment.For example, the landing fee paid to land an airplane at an airport is traceable to the particular flight, but it is not traceable to first-class, business-class, and economy-class passe

13、ngers.Segment MarginThe segment margin, which is computed by subtracting the traceable fixed costs of a segment from its contribution margin, is the best gauge of the long-run profitability of a segment.TimeProfitsTraceable and Common CostsFixedCostsTraceableCommonDont allocatecommon costs to segmen

14、ts.Activity-Based CostingActivity-based costing can help identify how costs shared by more than one segment are traceable to individual segments. Assume that three products, 9-inch, 12-inch, and 18-inch pipe, share 10,000 square feet of warehousing space, which is leased at a price of $4 per square

15、foot. If the 9-inch, 12-inch, and 18-inch pipes occupy 1,000, 4,000, and 5,000 square feet, respectively, then ABC can be used to trace the warehousing costs to the three products as shown.Levels of Segmented StatementsWebber, Inc. has two divisions.Levels of Segmented StatementsOur approach to segm

16、ent reporting uses the contribution format.Cost of goodssold consists of variable manufacturingcosts.Fixed andvariable costsare listed inseparatesections.Levels of Segmented StatementsSegment marginis Televisions contributionto profits.Contribution marginis computed by taking sales minus variable co

17、sts.Our approach to segment reporting uses the contribution format.Levels of Segmented StatementsLevels of Segmented StatementsCommon costs should not be allocated to the divisions. These costs would remain even if one of the divisions were eliminated.Traceable Costs Can Become Common CostsAs previo

18、usly mentioned, fixed costs that are traceable to one segment can become common if the company is divided into smaller segments.Lets see how this works using the Webber, Inc. example!Traceable Costs Can Become Common CostsProductLinesRegularBig ScreenTelevisionDivisionWebbers Television DivisionTrac

19、eable Costs Can Become Common CostsWe obtained the following information fromthe Regular and Big Screen segments.Traceable Costs Can Become Common CostsFixed costs directly tracedto the Television Division $80,000 + $10,000 = $90,000External ReportsThe International Financial Reporting Standards (IF

20、RS) and US GAAP require companies to include segmented financial data in their annual reports.In addition to some compulsory disclosure, companies must report segmented results to shareholders using the same measures to be used by the Chief Operating Decision Maker (CODM) to make decisionsSince the

21、contribution approach to segment reporting does not comply with financial reporting standards, it is likely that some managers will choose to construct their segmented financial statements using the absorption approach to comply with GAAP.Omission of CostsCosts assigned to a segment should include a

22、ll costs attributable to that segment from the companys entire value chain. Product Customer R&D Design Manufacturing Marketing Distribution ServiceBusiness FunctionsMaking Up TheValue ChainInappropriate Methods of Allocating Costs Among SegmentsSegment1Segment3Segment4Inappropriateallocatio

23、n baseSegment2Failure to tracecosts directlyCommon Costs and Segments Segment1Segment3Segment4Segment2Common costs should not be arbitrarily allocated to segments based on the rationale that “someone has to cover the common costs for two reasons:This practice may make a profitable business segment a

24、ppear to be unprofitable. Allocating common fixed costs forces managers to be held accountable for costs they cannot control.Quick Check ?Assume that Hoagland's Lakeshore prepared its segmented income statement as shown.Quick Check ? How much of the common fixed cost of $200,000 can be avoi

25、ded by eliminating the bar?a. None of it.b. Some of it.c. All of it.Quick Check ? How much of the common fixed cost of $200,000 can be avoided by eliminating the bar?a. None of it.b. Some of it.c. All of it.A common fixed cost cannot be eliminated by dropping one of the segments. Quick Check ? Suppo

26、se square feet is used as the basis for allocating the common fixed cost of $200,000. How much would be allocated to the bar if the bar occupies 1,000 square feet and the restaurant 9,000 square feet?a. $20,000b. $30,000c. $40,000d. $50,000 Suppose square feet is used as the basis for allocating the

27、 common fixed cost of $200,000. How much would be allocated to the bar if the bar occupies 1,000 square feet and the restaurant 9,000 square feet?a. $20,000b. $30,000c. $40,000d. $50,000Quick Check ?The bar would be allocated 1/10 of the cost or $20,000.Quick Check ?If Hoagland's allocates

28、its common costs to the bar and the restaurant, what would be the reported profit of each segment?Allocations of Common CostsHurray, now everything adds up!Quick Check ? Should the bar be eliminated?a. Yesb. No Should the bar be eliminated?a. Yesb. NoQuick Check ?The profit was $44,000 before elimin

29、ating the bar. If we eliminate the bar, profit drops to $30,000!Learning Objective 2Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.Return on Investment (ROI) FormulaROI = Net operating incomeAverage operating assets Cash, accounts receivable, invent

30、ory,plant and equipment, and otherproductive assets.Income before interestand taxes (EBIT)Net Book Value vs. Gross CostMost companies use the net book value of depreciable assets to calculate average operating assets.Understanding ROIROI = Net operating incomeAverage operating assets Margin = Net op

31、erating incomeSales Turnover = SalesAverage operating assets ROI = Margin ? TurnoverIncreasing ROIThere are three ways to increase ROI . . .IncreaseSalesReduceExpensesReduceAssetsIncreasing ROI An ExampleRegal Company reports the following: Net operating income $ 30,000 Average operating assets $ 20

32、0,000 Sales $ 500,000 Operating expenses $ 470,000ROI = Margin ? Turnover Net operating income Sales Sales Average operating assets×ROI =What is Regal Companys ROI?Increasing ROI An Example $30,000 $500,000×$500,000$200,000ROI = 6% ? 2.5 = 15%ROI = ROI = Margin ? Turnover Net operating inc

33、ome Sales Sales Average operating assets×ROI =Investing in Operating Assets to Increase SalesAssume that Regal's manager invests in a $30,000 piece of equipment that increases sales by $35,000, while increasing operating expenses by $15,000. Lets calculate the new ROI.Regal Company rep

34、orts the following:Net operating income $ 50,000Average operating assets $ 230,000Sales $ 535,000Operating expenses $ 485,000Investing in Operating Assets to Increase Sales $50,000 $535,000×$535,000$230,000ROI = 9.35% ? 2.33 = 21.8%ROI = ROI increased from 15% to 21.8%.ROI = Margin ? Turnover N

35、et operating income Sales Sales Average operating assets×ROI =Criticisms of ROIIn the absence of the balancedscorecard, management maynot know how to increase ROI.Managers often inherit manycommitted costs over whichthey have no control.Managers evaluated on ROImay reject profitableinvestment o

36、pportunities. Learning Objective 3Compute residual income and understand its strengths and weaknesses.Residual Income - Another Measure of PerformanceNet operating incomeabove some minimumreturn on operatingassetsCalculating Residual Income()This computation differs from ROI. ROI measures net operat

37、ing income earned relative to the investment in average operating assets. Residual income measures net operating income earned less the minimum required return on average operating assets.Residual Income An ExampleThe Retail Division of Zephyr, Inc. has average operating assets of $100,000 and is re

38、quired to earn a return of 20% on these assets.In the current period, the division earns $30,000.Lets calculate residual income.Residual Income An ExampleMotivation and Residual IncomeResidual income encourages managers to make profitable investments that wouldbe rejected by managers using ROI.Quick

39、 Check ? Redmond Awnings, a division of Wrap-up Corp., has a net operating income of $60,000 and average operating assets of $300,000. The required rate of return for the company is 15%. What is the divisions ROI?a. 25%b. 5%c. 15%d. 20%Quick Check ? Redmond Awnings, a division of Wrap-up Corp., has

40、a net operating income of $60,000 and average operating assets of $300,000. The required rate of return for the company is 15%. What is the divisions ROI?a. 25%b. 5%c. 15%d. 20%ROI = NOI/Average operating assets = $60,000/$300,000 = 20%Quick Check ? Redmond Awnings, a division of Wrap-up Corp., has

41、a net operating income of $60,000 and average operating assets of $300,000. If the manager of the division is evaluated based on ROI, will she want to make an investment of $100,000 that would generate additional net operating income of $18,000 per year?a. Yesb. NoQuick Check ? Redmond Awnings, a di

42、vision of Wrap-up Corp., has a net operating income of $60,000 and average operating assets of $300,000. If the manager of the division is evaluated based on ROI, will she want to make an investment of $100,000 that would generate additional net operating income of $18,000 per year?a. Yesb. NoROI =

43、$78,000/$400,000 = 19.5%This lowers the divisions ROI from 20.0% down to 19.5%.Quick Check ? The companys required rate of return is 15%. Would the company want the manager of the Redmond Awnings division to make an investment of $100,000 that would generate additional net operating income of $18,00

44、0 per year?a. Yesb. NoQuick Check ? The companys required rate of return is 15%. Would the company want the manager of the Redmond Awnings division to make an investment of $100,000 that would generate additional net operating income of $18,000 per year?a. Yesb. NoROI = $18,000/$100,000 = 18%The ret

45、urn on the investment exceeds the minimum required rate of return.Quick Check ? Redmond Awnings, a division of Wrap-up Corp., has a net operating income of $60,000 and average operating assets of $300,000. The required rate of return for the company is 15%. What is the divisions residual income?a. $

46、240,000b. $ 45,000c. $ 15,000d. $ 51,000Quick Check ? Redmond Awnings, a division of Wrap-up Corp., has a net operating income of $60,000 and average operating assets of $300,000. The required rate of return for the company is 15%. What is the divisions residual income?a. $240,000b. $ 45,000c. $ 15,

47、000d. $ 51,000Net operating income $60,000Required return (15% of $300,000) (45,000)Residual income $15,000Quick Check ? If the manager of the Redmond Awnings division is evaluated based on residual income, will she want to make an investment of $100,000 that would generate additional net operating

48、income of $18,000 per year?a. Yesb. NoQuick Check ? If the manager of the Redmond Awnings division is evaluated based on residual income, will she want to make an investment of $100,000 that would generate additional net operating income of $18,000 per year?a. Yesb. NoNet operating income $78,000Req

49、uired return (15% of $400,000) (60,000)Residual income $18,000 Yields an increase of $3,000 in the residual income.Divisional Comparisons and Residual IncomeThe residual income approach has one major disadvantage. It cannot be used to compare the performance of divisions of different sizes.Zephyr, I

50、nc. - ContinuedRecall the following information for the Retail Division of Zephyr, Inc. Assume the following information for the Wholesale Division of Zephyr, Inc. Zephyr, Inc. - ContinuedThe residual income numbers suggest that the Wholesale Division outperformed the Retail Division because its res

51、idual income is $10,000 higher. However, the Retail Division earned an ROI of 30% compared to an ROI of 22% for the Wholesale Division. The Wholesale Divisions residual income is larger than the Retail Division simply because it is a bigger division.Learning Objective 4Understand how to construct an

52、d use a balanced scorecard.The Balanced ScorecardManagement translates its strategy into performance measures that employees understand and influence.Performance measuresCustomersLearning and growthInternal business processesFinancialThe Balanced Scorecard: FromStrategy to Performance MeasuresFinanc

53、ialHas our financial performance improved?CustomerDo customers recognize that we are delivering more value?Internal Business ProcessesHave we improved key business processes so that we can deliver more value to customers?Learning and GrowthAre we maintaining our ability to change and improve?Perform

54、ance MeasuresWhat are our financial goals?What customers do we want to serve and how are we going to win and retain them?What internal busi- ness processes are critical to providing value to customers?Vision and StrategyThe Balanced Scorecard: Non-financial MeasuresThe balanced scorecard relies on n

55、on-financial measures in addition to financial measures for two reasons: Financial measures are lag indicators that summarize the results of past actions. Non-financial measures are leading indicators of future financial performance. Top managers are ordinarily responsible for financial performance measures not lowe