131 hansen & mowen cost management accounting and control
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131
HANSEN & MOWENHANSEN & MOWEN
Cost ManagementCost ManagementACCOUNTING AND CONTROLACCOUNTING AND CONTROL
132
The Balanced Scorecard: The Balanced Scorecard: Strategic-Based ControlStrategic-Based Control
13
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The activity-based system adds a process
perspective to the financial perspective of
the functional-based responsibility accounting
system.
The activity-based system adds a process
perspective to the financial perspective of
the functional-based responsibility accounting
system.A strategy-based
responsibility accounting system translates the
strategy of the organization into
operational objectives and measures.
A strategy-based responsibility accounting
system translates the strategy of the
organization into operational objectives
and measures.
Activity-Based versus Strategic-Based Activity-Based versus Strategic-Based Responsibility AccountingResponsibility Accounting 1
134
The Balanced Scorecard is a strategic-
based performance management system that typically identifies
objectives and measures for four
different perspectives.
The Balanced Scorecard is a strategic-
based performance management system that typically identifies
objectives and measures for four
different perspectives.
The financial perspective
The customer perspective
The process perspective
The learning and growth perspective
Activity-Based versus Strategic-Based Activity-Based versus Strategic-Based Responsibility AccountingResponsibility Accounting 1
135
Activity-Based versus Strategic-Based Activity-Based versus Strategic-Based Responsibility AccountingResponsibility Accounting 1
Responsibility Assignments ComparedResponsibility Assignments ComparedResponsibility Assignments ComparedResponsibility Assignments Compared
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Activity-Based versus Strategic-Based Activity-Based versus Strategic-Based Responsibility AccountingResponsibility Accounting 1
Performance Measures ComparedPerformance Measures ComparedPerformance Measures ComparedPerformance Measures Compared
137
Activity-Based versus Strategic-Based Activity-Based versus Strategic-Based Responsibility AccountingResponsibility Accounting 1
Performance Evaluation Compared: Performance Evaluation Compared: ABC versus Strategic-BasedABC versus Strategic-Based
Performance Evaluation Compared: Performance Evaluation Compared: ABC versus Strategic-BasedABC versus Strategic-Based
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Activity-Based versus Strategic-Based Activity-Based versus Strategic-Based Responsibility AccountingResponsibility Accounting 1
Rewards ComparedRewards ComparedRewards ComparedRewards Compared
139
Strategy is choosing the market and customer segments the business unit
intends to service, identifying the critical internal and business processes that the
unit must excel at to deliver the value propositions to customers in the targeted
market segments, and selecting the individual and organizational capabilities required for the internal, customer, and
financial objectives.
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1310
Process value analysis is fundamental to activity-based responsibility accounting, focuses on
accountability for activities rather than costs, and emphasizes the maximization of systemwide
performance instead of individual performance.
Process value analysis is concerned with:
(1) Driver analysis
(2) Activity analysis
(3) Performance measurement
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1311
Strategy Translation ProcessStrategy Translation ProcessStrategy Translation ProcessStrategy Translation Process
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1312
Summary of Objectives and Measures: Summary of Objectives and Measures: Financial PerspectiveFinancial Perspective
Summary of Objectives and Measures: Summary of Objectives and Measures: Financial PerspectiveFinancial Perspective
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1313
Summary of Objectives and Measures: Summary of Objectives and Measures: Customer PerspectiveCustomer Perspective
Summary of Objectives and Measures: Summary of Objectives and Measures: Customer PerspectiveCustomer Perspective
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
Only financial measure among core objectives
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Customer value is the difference between realization and sacrifice, where realization is what the customer receives and sacrifice
is what is given up.
Customer value is the difference between realization and sacrifice, where realization is what the customer receives and sacrifice
is what is given up.
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1315
The time it takes a company to respond to
a customer order is referred to as
responsiveness.
The time it takes a company to respond to
a customer order is referred to as
responsiveness.
Cycle time and velocity are two
operation measures of responsiveness.
Cycle time and velocity are two
operation measures of responsiveness.
Cycle time (manufacturing) is the length of time it takes to
produce a unit of output from the time materials are received until the good is delivered to finished
goods inventory.
Cycle time (manufacturing) is the length of time it takes to
produce a unit of output from the time materials are received until the good is delivered to finished
goods inventory.Velocity is the number of units of output that an be produced in a
given period of time.
Velocity is the number of units of output that an be produced in a
given period of time.
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1316
A company has the following data for one of its manufacturing cells:
Theoretical velocity: 40 units per hour
Productive minutes available (per year): 1,200,000
Annual conversion costs: $4,800,000
Actual velocity: 30 units per hour
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
Conversion Cost Example
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Conversion Cost ComputationsConversion Cost ComputationsConversion Cost ComputationsConversion Cost Computations
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1318
Summary of Objectives and Measures: Summary of Objectives and Measures: Process PerspectiveProcess Perspective
Summary of Objectives and Measures: Summary of Objectives and Measures: Process PerspectiveProcess Perspective
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1319
Summary of Objectives and Measures: Summary of Objectives and Measures: Learning and Growth PerspectiveLearning and Growth Perspective
Summary of Objectives and Measures: Summary of Objectives and Measures: Learning and Growth PerspectiveLearning and Growth Perspective
Basic Concepts of the Balanced Basic Concepts of the Balanced ScorecardScorecard 2
1320
3Linking Measures to StrategyLinking Measures to Strategy
Strategy Map: Testable Strategy IllustratedStrategy Map: Testable Strategy IllustratedStrategy Map: Testable Strategy IllustratedStrategy Map: Testable Strategy Illustrated
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Strategic AlignmentStrategic Alignment 4
ABM Implementation ModelABM Implementation ModelABM Implementation ModelABM Implementation Model
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