In this chapter, the learning objectives are: Identify the objectives of management control; identify the types of management control systems; explain the objectives and applications of strategic performance measurement in three common strategic business units: cost centers, revenue centers, and profit centers; | Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard Chapter Eighteen McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. 18-2 Identify the objectives of management control Identify the types of management control systems Explain the objectives and applications of strategic performance measurement in three common strategic business units: cost centers, revenue centers, and profit centers Learning Objectives 18-3 Learning Objectives (continued) Explain the role of variable costing and full costing in evaluating profit centers Explain the role of the balanced scorecard in strategic performance measurement 18-4 Performance Measurement and Control Performance measurement is the process by which managers at all levels gain information about the performance of tasks within the firm and judge that performance against pre-established criteria as set out in budgets, plans, and goals Top management, middle management, and operating-level personnel should be evaluated Management control refers to the evaluation by upper-level managers of the performance of mid-level managers 18-5 Performance Measurement and Control (continued) Operational control means the evaluation of operating-level employees by mid-level managers Management control focuses on higher-level managers and long-term strategic issues (a broader objective), while operational control focuses on detailed short-term performance Operational control is a management-by-exception approach while management control is more consistent with the management-by-objectives approach 18-6 Performance Measurement and Control (continued) Management Control Operational Control Financial Management Operations Management Marketing Management Plant A Plant B Region B Region A Chief Executive Employee 1 Employee 2 Employee 3 Employee 4 18-7 Management-by-Objectives In a management-by-objectives approach, top management assigns a set of responsibilities to | Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard Chapter Eighteen McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. 18-2 Identify the objectives of management control Identify the types of management control systems Explain the objectives and applications of strategic performance measurement in three common strategic business units: cost centers, revenue centers, and profit centers Learning Objectives 18-3 Learning Objectives (continued) Explain the role of variable costing and full costing in evaluating profit centers Explain the role of the balanced scorecard in strategic performance measurement 18-4 Performance Measurement and Control Performance measurement is the process by which managers at all levels gain information about the performance of tasks within the firm and judge that performance against pre-established criteria as set out in budgets, plans, and goals Top management, middle .
