(BQ) Chapter 14: Business unit performance measurement. We described the organization of the firm in Chapter 12 by referring to responsibility centers: cost centers, profit centers, and investment centers. In this chapter, we develop and analyze performance measures for investment centers. Recall that in an investment center, managers have responsibility for asset deployment in addition to revenue and cost responsibilities. | © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Fundamentals of Cost Accounting, 4th edition Lanen/Anderson/Maher Business Unit Performance Measurement Chapter 14 Chapter 14: Business Unit Performance Measurement We described the organization of the firm in Chapter 12 by referring to responsibility centers: cost centers, profit centers, and investment centers. In this chapter, we develop and analyze performance measures for investment centers. Recall that in an investment center, managers have responsibility for asset deployment in addition to revenue and cost responsibilities. Learning Objectives LO 14-1 Evaluate divisional accounting income as a performance measure. LO 14-2 Interpret and use return on investment (ROI). LO 14-3 Interpret and use residual income (RI). LO 14-4 Interpret and use economic value added (EVA). LO 14-5 Explain how historical cost and net book value-based accounting measures can be misleading in evaluating performance. After completing this chapter you should be able to: 1. Evaluate divisional accounting income as a performance measure. 2. Interpret and use return on investment (ROI). 3. Interpret and use residual income (RI). 4. Interpret and use economic value added (EVA), and 5. Explain how historical cost and net book value-based accounting measures can be misleading in evaluating performance. Divisional Performance Measurement As we develop performance measures, our discussion will be guided by three considerations. Is the performance measure consistent with the decision authority of the manager? Does the measure reflect the results of those actions that improve the performance of the organization? What actions might managers be taking that improve reported performance but are actually detrimental to . | © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Fundamentals of Cost Accounting, 4th edition Lanen/Anderson/Maher Business Unit Performance Measurement Chapter 14 Chapter 14: Business Unit Performance Measurement We described the organization of the firm in Chapter 12 by referring to responsibility centers: cost centers, profit centers, and investment centers. In this chapter, we develop and analyze performance measures for investment centers. Recall that in an investment center, managers have responsibility for asset deployment in addition to revenue and cost responsibilities. Learning Objectives LO 14-1 Evaluate divisional accounting income as a performance measure. LO 14-2 Interpret and use return on investment (ROI). LO 14-3 Interpret and use residual .
