Management accounting influence, Managerial Accounting

Assignment Help:

Management Accounting Influence


(A) Transfer pricing and performance measurement relies upon the judgment of the management accountant to make a suitable choice of approach and to calculate suitable values where appropriate.

(B) Values which are suitable for performance measurement purposes are not necessarily suitable for decision making, planning and control purposes. For planning purposes, reasonable future forecasts or targets which meet long-term planning requirements present two acceptable approaches and incremental budgeting offers a third means by which values can be established in practice.  For control purposes, values should ideally be set just above aspiration levels. For performance measurement purposes, values should be set which avoid sub-optimization and dysfunctional behavior and which further the objectives of the performance measurement scheme and of the company in general.  It is unlikely that a single value can meet all requirements.

In some circumstances, multiple values can be established. In overcoming the problem of setting up reliable and valid values for control, planning, decision making and performance measurement needs, however, further problems may arise. Imagine that a company establishes one target for performance measurement purposes and another, lower value, for planning purposes. The planning value must be kept secret from the divisional manager if it is to motivate since some types of manager may lower aspiration levels to the planned target. Secrecy can have detrimental effects to the coordination and communication objectives of budgeting. Again, the behavioral consequences of establishing values are of paramount importance and the management accountant finds that effective accounting is partly based on setting up sound systems at the technical level and partly based on setting up systems which work for the people within the organization.

(C) Emphasis on cost, profit and investment centre performance in the short term can have detrimental effects on the organization in the long term.


Related Discussions:- Management accounting influence

Break even assumptions, underlying assumptions of breakeven analysis and th...

underlying assumptions of breakeven analysis and the limitations of this.

Cost, Stellar Packaging Products and its primary customer, Estrella Coffee,...

Stellar Packaging Products and its primary customer, Estrella Coffee, are deciding on appropriate costing systems for their operations. Stellar Packaging Products’ manufacturing is

Analysis of financial ratios, Analysis of Financial Ratios: Ratios are com...

Analysis of Financial Ratios: Ratios are computed to find out the customer's liquidity position and capability to repay debts. The computed ratios must be compared along with the

Determine the distribution cost and research cost, Determine the Distributi...

Determine the Distribution cost and Research cost Distribution cost: The cost of sequence of the operations which begin with making the packed product available for dispa

State the steps for standard costing system, State the steps for Standard c...

State the steps for Standard costing system standard costing system involves the following steps 1) Setting-up of standards for each element of cost: standards should be s

What are the advantages of contributionmargin analysis, What are the Advant...

What are the Advantages of contributionmargin analysis the concept of contribution is variable aid to management in making managerial decisions . a few benefits resulting from

Private sector companies have multiple stakeholders who are, Private sector...

Private sector companies have multiple stakeholders who are likely to have divergent interests.( five stakeholder groups and discuss their financial and other objectives).

#titDescribe the "agency problem" and the Sarbanes-Oxleyle.., Discuss the d...

Discuss the dominant compensation philosophy, share value creation and the link between company size and executive pay. Solve Parmalat''s case, which may be found in reading No. 8.

Material storage, Material storage Sophisticated mathematical models to...

Material storage Sophisticated mathematical models to control economic buying, and systems control the flow of material may all be for naught if the obvious-efficient storekeep

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd