Akuntansi Pertanggungjawaban Juli 2010.ppt

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Chapter Twelve

Responsibility Accounting and Performance Evaluation McGraw-Hill/Irwin

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Why Responsibility Centers? Large complex businesses are divided into responsibility centers enabling managers to have a smaller effective span of control. McGraw-Hill/Irwin

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Advantages of Decentralized Operations 1. Lower-level managers can react more quickly to problems or changes in operations. 2. Lower-level managers are closer and more responsive to the customer’s needs. 3. The operation provides a better training ground for managers. 4. Delegation improves employee morale. 5. Top management is free to devote time to strategic planning.

McGraw-Hill/Irwin

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Disadvantages of Decentralized Operations 1. Assets and operating costs are duplicated (e.g., each division has its own administrative staff).

2. Managers may pursue their own goals, instead of company goals.

McGraw-Hill/Irwin

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Responsibility Centers A subunit in an organization whose manager is held accountable for specified financial results.

McGraw-Hill/Irwin

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Responsibility Centers Cost Center Segment has control over the incurrence of costs.

The Paint Department in an automobile plant. McGraw-Hill/Irwin

Revenue Center Segment is responsible for the revenue of a unit.

The Reservations Department of an airline.

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Responsibility Centers Profit Center

Investment Center

Segment has control over both costs and revenues.

Segment has control over profits and invested capital.

Company-owned restaurant in a fast-food chain.

A division of a large corporation.

McGraw-Hill/Irwin

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Summary: Responsibility Centers Cost Centers

Managers are held accountable for controlling costs. Profit Centers

Managers are held accountable for costs and making decisions that impact revenues favorably. Investment Centers Managers are held accountable for costs and revenues and are also held accountable for the efficient use of assets.

McGraw-Hill/Irwin

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McGraw-Hill/Irwin

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Measuring Management Performance

Evaluation Tool Cost Center

Cost standards

Profit Center

Contribution income statement

Investment Center McGraw-Hill/Irwin

Rate of return on invested funds or residual income

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Performance Reports Shows the budgeted and actual amounts, and the variances between these amounts, of key financial results appropriate for the type of responsibility center.

McGraw-Hill/Irwin

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Behavioral Effects of Responsibility Accounting

Controllability

Information versus Blame McGraw-Hill/Irwin

Motivating Desired Behavior

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Linking Goals, Objectives, Measures and Performance Targets The links should be causal: Goal 

Objective 

Measure 

Performance Target

To be a friend of the environment

To reduce the company’s environmental risk

Number of products recycled

To recycle at least 10% of products sold

McGraw-Hill/Irwin

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Discussion Q.

A.

McGraw-Hill/Irwin

What does “an organization will get what it measures” mean?

If performance measures (and incentives) are based on specific objectives, managers will be motivated to achieve the objectives that are being measured.

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Segmented Reporting A segment is any part or activity of an organization about which a manager seeks cost, revenue, or profit data.

McGraw-Hill/Irwin

The Operating Section of a hospital

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Segmented Reporting Product Lines

•

Cell Phone Division

Systems

U.S. Sales

Personal

Foreign Sales

U.S. Sales

• Sales Territories McGraw-Hill/Irwin

Foreign Sales

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Key Features of Segmented Reporting Contribution format. Controllable versus uncontrollable expenses. Segmented income statement.

McGraw-Hill/Irwin

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Segmented Income Statement Contribution Format Sales Variable costs CM Traceable FC Segment margin Common costs Net income

Income Statement Cell Phone Division Systems $ 300,000 $ 200,000 (150,000) (95,000) 150,000 105,000 (80,000) (45,000) 70,000 60,000 10,000 $ 60,000

Personal $ 100,000 (55,000) 45,000 (35,000) 10,000

Costs that cannot be controlled by the segment manager are isolated. McGraw-Hill/Irwin

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Cost Center Responsibility Accounting Budget Performance Report Vice-President, Production For the Month Ended October 31, 2003 Budget

Administration Plant A Plant B

Actual

$ 19,500 $ 19,700 467,475 470,330 395,225 394,300 $882,200 $884,330

Each of the line items above will be supported by a cost center report.

McGraw-Hill/Irwin

Over Budget

Under Budget

$ 200 2,855 $3,550

$925 $925

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Cost Center Responsibility Accounting Budget Performance Report Vice-President, Production For the Month Ended October 31, 2003 Budget

Administration Plant A Plant B

$ 19,500 $ 19,700 467,475 470,330 395,225 394,300 $882,200 $884,330

This is supported by a cost center report for Plant A.

McGraw-Hill/Irwin

Actual

Over Budget

Under Budget

$ 200 2,855 $3,550

$925 $925

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Cost Center Responsibility Accounting Budget Performance Report Manager, Plant A For the Month Ended October 31, 2003 Budget

Administration Department 1 Department 2 Department 3

$ 17,500 $ 17,350 109,725 111,280 190,500 192,600 149,750 149,100 $467,475 $470,330

This is shown on the production report.

McGraw-Hill/Irwin

Actual

Over Budget

Under Budget

$150

$1,555 2,100 $3,655

650 $800

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Cost Center Responsibility Accounting Budget Performance Report Manager, Plant A For the Month Ended October 31, 2003 Budget

Administration Department 1 Department 2 Department 3

$ 17,500 $ 17,350 109,725 111,280 190,500 192,600 149,750 149,100 $467,475 $470,330

This is supported by a cost center report for Department 1. McGraw-Hill/Irwin

Actual

Over Budget

Under Budget

$150

$1,555 2,100 $3,655

650 $800

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Cost Center Responsibility Accounting Budget Performance Report Supervisor, Department 1—Plant A For the Month Ended October 31, 2003 Budget

Actual

Factory wages $ 58,100 $ 58,000 Materials 32,500 34,225 Supervisory salaries 6,400 6,400 Power and light 5,750 5,690 Depreciation 4,000 4,000 Maintenance 2,000 1,990 Insurance, taxes 975 975 $109,725 $111,280 This is shown on Plant A’s report. McGraw-Hill/Irwin

Over Budget

Under Budget

$150

$1,725 650

10 $1,725

$170

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Profit Center Responsibility Accounting Nova Entertainment Group Divisional Income Statements For the Year Ended December 31, 2003 Theme Movie Park Production Division Division

Revenues Operating expenses Income from operations

$6,000,000 2,495,000 $3,505,000

$2,500,000 405,000 $2,095,000

Income from operations before service department charges.

McGraw-Hill/Irwin

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Service Department Charges to Profit Centers Nova Entertainment Group Service Department Charges to NEG Divisions For the Year Ended December 31, 2003

Service Department

Purchasing Payroll accounting Legal Total charges

Theme Park Division

$250,000 204,000 25,000 $479,000

Movie Production Division

$150,000 51,000 225,000 $426,000

These costs are charged to the divisions based on the activity base of the service department.

McGraw-Hill/Irwin

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Service Department Charges to Profit Centers Nova Entertainment Group Service Department Charges to NEG Divisions For the Year Ended December 31, 2003

Service Department

Purchasing Payroll accounting Legal Total charges

Theme Park Division

$250,000 204,000 25,000 $479,000

Movie Production Division

$150,000 51,000 225,000 $426,000

25,000 purchase requisitions x $10 per requisition = $250,000 15,000 purchase requisitions x $10 per requisition = $150,000

McGraw-Hill/Irwin

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Service Department Charges to Profit Centers Nova Entertainment Group Service Department Charges to NEG Divisions For the Year Ended December 31, 2003

Service Department

Purchasing Payroll accounting Legal Total charges

Theme Park Division

$250,000 204,000 25,000 $479,000

Movie Production Division

$150,000 51,000 225,000 $426,000

12,000 payroll checks x $17 per check = $204,000 3,000 payroll checks x $17 per check = $51,000

McGraw-Hill/Irwin

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Service Department Charges to Profit Centers Nova Entertainment Group Service Department Charges to NEG Divisions For the Year Ended December 31, 2003

Service Department

Purchasing Payroll accounting Legal Total charges

Theme Park Division

Movie Production Division

$250,000 204,000 25,000 $479,000

100 hours x $250 per hour = $25,000 900 hours x $250 per hour = $225,000

McGraw-Hill/Irwin

$150,000 51,000 225,000 $426,000

Profit Center Responsibility Accounting

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Nova Entertainment Group Divisional Income Statements For the Year Ended December 31, 2003 Theme Movie Park Production

Revenues Operating expenses Income from operations before service department charges Less service dept. charges: Purchasing Payroll accounting Legal Total service dept. charges Income from operations McGraw-Hill/Irwin

$6,000,000 2,495,000

$2,500,000 405,000

$3,505,000

$2,095,000

$ 250,000 204,000 25,000 $ 479,000 $3,026,000

$ 150,000 51,000 225,000 $ 426,000 $1,669,000

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Return on Investment (ROI) Traditionally the most common performance measure ROI =

Operating Income Average Assets Invested

=

Operating Income Sales

=

Profit Margin

McGraw-Hill/Irwin

x

x

Sales Average Assets Invested Asset Turnover

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McGraw-Hill/Irwin

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Investment Center Responsibility Accounting DataLink Inc. Divisional Income Statements For the Year Ended December 31, 2003 Northern Division

Revenues

Operating expenses

Central Southern Division Division

$560,000 $672,000 $750,000

336,000

470,400

562,500

Income from operations before service dept. charges $224,000 $201,600 $187,500 Service department charges

154,000

117,600

112,500

Income from operations

$ 70,000

$ 84,000

$ 75,000

Invested assets

$350,000 $700,000 $500,000

Rate of return on investment McGraw-Hill/Irwin

20%

12%

15%

Investment Center Responsibility Accounting Profit Margin Income from operations Revenues (Sales) Profit margin

Northern Division

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Central Southern Division Division

$ 70,000 $ 84,000 $ 75,000 $560,000 $672,000 $750,000 12.5% 12.5% 10.0%

Investment Turnover Revenues (Sales) Invested assets Investment turnover

$560,000 $672,000 $750,000 $350,000 $700,000 $500,000 1.6 .96 1.5

Rate of Return (ROI) Income from operations Invested assets Rate of return on investment McGraw-Hill/Irwin

$ 70,000 $ 84,000 $ 75,000 $350,000 $700,000 $500,000 20%

12%

15%

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Rate of Return on Investment DataLink Inc. Divisional Income Statements For the Year Ended December 31, 2003 Northern Division

Profit margin Investment turnover Rate of return on investment

McGraw-Hill/Irwin

Central Southern Division Division

12.5% x 1.6

12.5% x .96

10.0% x 1.5

20%

12%

15%

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Residual Income  The operating income earned above a minimum desired return on invested assets. Residual Income = Operating Income – (Desired ROI x Average Assets Invested)  Residual income eliminates the possibility of missed income opportunities that exist if ROI is used as a performance measure. BUT residual income does not provide a meaningful comparison between investment centers of a different size because residual income shows absolute dollars not a percentage.

McGraw-Hill/Irwin

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Economic Value Added – the shareholder wealth created by an investment center.

Cost of Capital – the minimum desired rate of return on an investment.

EVA = After Tax Operating Income – [Cost of Capital x (Total Assets – Current Liabilities)]

McGraw-Hill/Irwin

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Residual Income DataLink Inc. Divisional Income Statements For the Year Ended December 31, 2003 Northern Division

Central Southern Division Division

Income from operations

$ 70,000

$ 84,000

$ 75,000

Invested assets Minimum desired return Minimum desired income Residual income

$350,000 $700,000 $500,000 10.0% 10.0% 10.0% $ 35,000 $ 70,000 $ 50,000 $ 35,000 $ 14,000 $ 25,000

How can Northern Division have the highest residual income when they have the lowest income from operations?

McGraw-Hill/Irwin

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Activity-Based Responsibility Accounting Traditional responsibility-accounting systems tend to focus on the financial performance measures of cost, revenue, and profit for subunits of the organization.

Activity-based costing systems associate costs with the activities that drive those costs. In activity-based responsibility accounting attention is directed not only to costs incurred but also to the activity creating the cost. McGraw-Hill/Irwin

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Nonfinancial Performance Measurement Nonfinancial performance measures combined with conventional financial measures provide a balanced performance perspective. 1. Measures of product quality 2. Customer complaints and warranty experience 3. Customer satisfaction and retention rates 4. Product availability and on-time performance 5. New product time to market and market share

McGraw-Hill/Irwin

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Discussion Q.

A.

McGraw-Hill/Irwin

Why should multiple performance measures be used to evaluate investment center performance?

Because any one performance measure tends to emphasize only one particular aspect of performance.

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Transfer Prices The amount charged when one division sells goods or services to another division.

Batteries Battery Division McGraw-Hill/Irwin

Auto Division

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Transfer Prices The transfer price affects the profit measure for both buying and selling divisions. A higher transfer price for batteries means . . .

Battery Division McGraw-Hill/Irwin

. . . greater profits for the Battery Division.

Auto Division

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Transfer Prices The transfer price affects the profit measure for both buying and selling divisions. A higher transfer price for batteries means . . .

Battery Division McGraw-Hill/Irwin

. . . lower profits for the Auto Division.

Auto Division

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Benefits of Transfer Pricing 1. Divisions can be evaluated as profit or investment centers. 2. Divisions are forced to control costs and operate competitively. 3. If divisions are permitted to buy component parts wherever they can find the best price (either internally or externally), transfer pricing will allow a company to maximize its profits.

McGraw-Hill/Irwin

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Commonly Used Transfer Prices 1. Market price approach sets the price at which the product transferred could be sold to outside buyers. 2. Negotiated price approach allows decentralized managers to agree (negotiate) among themselves. 3. Cost price approach uses a variety of cost concepts for setting the transfer price. Commonly Used Transfer Prices Variable Cost per Unit $10

Full Cost per Unit $13 Negotiated Price

McGraw-Hill/Irwin

Market Price per Unit $20

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Transfer Prices When the external market value of goods transferred is unavailable . . . Negotiated transfer price

Cost-plus transfer price

Transfer prices have no direct effect upon the company’s overall net income. McGraw-Hill/Irwin

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Transfer Pricing—Negotiated Price Approach Assumptions 1. Division M produces a product with a variable cost of $10 per unit. Division M has unused capacity. 2. Division N purchases 20,000 units of the same product at $20 per unit from an outside source.

Variable Cost per Unit $10

Market Price per Unit $20 Negotiated Price

Division M

McGraw-Hill/Irwin

If the division managers agree on a price of $18 per unit, how much will each division’s income increase? How much for the overall company?

Division N

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International Transfer Price(s) sing

Price: ? Cost:? Tax: 0% EAT:…

? indonesia Price: Rp20.000 Cost:Rp15.000 Tax:10% EAT:Rp4.500 McGraw-Hill/Irwin

USA Price: Rp40.000 Cost:Rp25.000 Tax:5% EAT:Rp14.250

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Power Notes Performance Evaluation for Decentralized Operations

This is the last slide Note: To see the topic slide, type 2 and press Enter.

McGraw-Hill/Irwin