Why is goal congruence important to an organization's success? How does a responsibility accounting system foster goal congruence?
Describe the relationship between performance reports and flexible budgeting.
A responsibility-accounting system fosters goal congruence by establishing the performance criteria by which each manager will be evaluated. Development of performance measures and standards for those measures can help to ensure that managers are striving toward goals that are supportive of the organisation's overall
Goal congruence is important to achieve the organization's goals set by top management. Delegation of decision making is done for quick decision making and to take the advantage of expertise or skills of sub unit managers. The managers of each sub unit are made responsible for the financial performance of their unit.
The following are some crucial steps to achieving goal congruence.
A flexible budget performance report is used to compare actual results for a period to the budgeted results generated by a flexible budget. This report varies from a traditional budget versus actual report, in that the actual sales figure is plugged into the budget model, which then uses formulas to alter the budgeted expense amounts. This approach results in budgeted expenses that are significantly more relevant to the actual performance that an organization experiences.
If the flexible budget model is designed to adjust to actual sales inputs in a reasonable manner, then the resulting performance report should closely align with actual expenses. This makes it easier to spot anomalies in the report, which should be rare. Management can then focus on the significant variances to see if any actions should be taken to ensure that actual results remain close to expectations.
For example, ABC International has adopted a flexible budget model, in which the cost of goods sold should be 25% of sales. In the most recent period, actual sales were $1,000,000. When this figure is input into the model, it generates a budgeted cost of goods sold of $250,000. The actual cost of goods sold was $260,000. This information is inserted into the accounting department's flexible budget performance report, where the cost of goods sold line item shows a $10,000 unfavorable variance.
The flexible budget model and its related reports are a significant improvement over the more common static model, where there is only one version of a budget, and that budget does not change. When a static model is the basis of comparison, the likely outcome is large favorable and/or unfavorable variances for many line items, since the static model may have been based on a sales level that is no longer relevant to actual conditions.
Why is goal congruence important to an organization's success? How does a responsibility accounting system foster...
why is goal congruence important to an organization’s success? How does a responsibility-accounting system foster goal congruence?
Which of the following is true regarding a responsibility accounting system? It should not hold a manager responsible for costs over which the manager has no influence It assigns responsibility for costs to the appropriate managerial level that controls those costs It is designed to measure the performance of managers in terms of controllable costs It can be applied at any level of organization All of the above are true Outdoor Living Company has just received a special order for...
Think of organizations as any team that you worked with that had a goal or mission and respond to the following: What is the relationship between organizational structure and culture? Provide examples and/or resources to defend your position. Based on your experience and observations, how would you describe the organizational structure and culture at your current, former, or potential future employer? How does this structure support the organizational strategies or inhibit them? What types of organizational structures and cultures would...
. Chapter 1 What is MIS? Why is it important? Chapter 2 Describe collaboration IS and discuss the criteria for the success of collaboration. Chapter 3 Discuss the relationship between organizational strategy and IS structure. Define and describe how IS provides competitive advantages.
Both Andy Pforzheimer and Scott Lawton describe how important collaboration between managers is to the success of Barcelona Restaurant Group. Which of the following causes of conflict can be traced back to the high level of group work in the company? A. Specialization. B. Status inconsistencies. C. Interdependence. D. Goal differences.
Class: ACCT-301 --> WEEK 6: RESPONSIBILITY ACCOUNTING Please describe what a cost center is. How does this differ from a profit center?
What is depreciation in the capital budgeting process? Why is it important to consider? How is it calculated? What property/assets can be depreciated? What is the relationship between depreciat ing an asset, and the terminal value of the asset?
why is accounting important to a company like Uber? How does accurate financial reporting contribute to sound decision making?
what does the concept of "core competence" mean? why is this concept important? How would you determine if the information an organization "claims" as its core competence actually matches what they achieve? Provide an example where there is a match between core competence and organizational achievement. Discuss where you you obtain the information used to "test" the organization's ability to deliver on its core competence.
Which measures of performance are most important to your organization? Why? How does your answer to this question compare and contrast with how others might measure your performance? What are the implications of the similarities and differences?