Control of Operating Processes; Nonfinancial Performance Indicators This chapter deals with the design of effective control systems associated with business, including operating processes. As indicated in the text, a comprehensive management accounting and control system will have both financial indicators and nonfinancial performance indicators. Financial indicators can include the operating-income variances that can be calculated each period by using standard costs and flexible budgets. This question deals with the use of nonfinancial performance indicators as a complement to the financial-performance indicators that are useful for controlling operating processes.
Required
1. List and define the primary business processes in which organizations engage in their attempt to meet customer expectations.
2. Fundamentally, control systems (including management accounting and control systems) collect information regarding the extent to which specified objectives are being accomplished. For each of the operating processes identified in (1), provide a listing of possible objectives that the organization might pursue. For each listed objective, provide one or more relevant nonfinancial performance indicators (performance metrics) that the organization’s management accounting and control system might collect and report to management.
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