Purchase Solution

Techniques for evaluating managerial performance

Not what you're looking for?

Ask Custom Question

Chapter 23 introduces other techniques for evaluating managerial performance. The concept of decentralization and its relationship to responsibility accounting will be explained. You will learn how to calculate and interpret return on investment and residual income. Finally, you will study approaches used to establish the price of products that are transferred between divisions of the same company. Questions below:

2. When the operating costs for Bill Smith's production department were released, he was sure that he would be getting a raise. His costs were $20,000 less than the planned cost in the master budget. His supervisor informed him that the results look good but that a more in-depth analysis is necessary before raises can be assigned. What other considerations could Mr. Smith's supervisor be interested in before she rates his performance?

9. Minnie Divers, the manager of the marketing department for one of the industry's leading retail businesses, has been notified by the accounting department that her department experienced an unfavorable sales volume variance in the preceding period but a favorable sales price variance.
Based on these contradictory results, how would you interpret her overall performance as suggested by her variances?

15. Sara Anderson says that she is a busy woman with no time to look at favorable variances. Instead, she concentrates solely on the unfavorable ones. She says that favorable variances imply that employees are doing better than expected and need only quick congratulations. In contrast, unfavorable variances indicate that change is needed to get the substandard performance up to par. Do you agree? Explain.

Purchase this Solution
Solution Summary

Your tutorial is 456 words and explains the variances, how to interpret them, common misunderstandings about variances and why favorable variances require followup.

Solution Preview

2. When the operating costs for Bill Smith's production department were released, he was sure that he would be getting a raise. His costs were $20,000 less than the planned cost in the master budget. His supervisor informed him that the results look good but that a more in-depth analysis is necessary before raises can be assigned. What other considerations could Mr. Smith's supervisor be interested in before she rates his performance?

What we are not sure about is whether activity was down and that accounted for the reason his costs are down. If lower activity is the reason for the lower costs, it is not due to something exceptional or impressive about Bill's performance that led to the variance.

For example, what if the budget expected production to be 30,000 units. The actual demand was lower than budget and so production schedules were reduced to 28,000 units. Naturally, production used less material and labor than the budget expected during the period because they were making fewer units than the budget ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Introduction to Finance

This quiz test introductory finance topics.

View More Free Quizzes
Related BrainMass Solutions

  • Appraisal of expatriate managerial performance

    We really have to consider if we're evaluating performance based on what the manager has been given as a baseline for performance domestically, and then determine if we're using the correct standards in a foreign country.

  • Financial Accounting vs. Managerial Accounting Functions in Organizations

    Income statement discloses the performance of the organization. It tell about the profitability of the organization. Thus, Financial statements are useful tools for evaluating both profitability and liquidity.

  • Question about Functions of Managerial accounting

    Provides information about economic resources Management accounting is providing information, which is helpful in monitoring and evaluating management performance The function of managerial Accounting is to: Providing information to people inside

  • Evaluate Behavioral Based Interviewing with Intelligence Tests

    The criteria for evaluating in- basket exercise interviewing technique: The creation of the appropriate situations that the interviewees will respond to, will bring out their skills and abilities in the managerial job position.

  • effectiveness of the reward system

    Therefore, performance evaluation can be one of the techniques to ascertain the effectiveness of reward system.

  • Performance Evaluation of Employees

    The balanced scorecard is a strategy performance management tool that can be used for evaluating employees.

  • Advantages of IT and Management Skills

    For instance, such member allows companies to implement IT tools and techniques successfully for determining the causes of decreasing performance.

  • Human Resource Management

    However, managerial international experiences relates directly with working knowledge of managerial finance and international rents and economies, using such techniques as planning and forecasting to evaluate and improve on an organization's financial

  • Discuss: Managerial Accounting Practices

    Performance of Divisional managers is measured by evaluating whether the divisional managers have succeeded in evaluating the controllable costs.

View More Related Solutions