accounting
[APC309 STRATEGIC MANAGEMENT ACCOUNTING
Individual Assignment :
Task a and Task b
]
Table of Contents
Part a
1.0 Introduction to performance management …………………………………………………………………………….2
2.0 EVA and ROI ……………………………………………………………………………………………………………………………2
3.0 Mangers orientation due to using EVA and ROI……………………………………………………………………….3
4.0 Overcoming the short term nature of EVA and ROI………………………………………………………………….4
5.0 Appendix…………………………………………………………………………………………………………………………………8
Part b
1.0 Introduction of transfer pricing …………………………………………………………………………………………….11
2.0 Market Based transfer prices…………………………………………………………………………………………………12
3.0 Full cost transfer prices………………………………………………………………………………………………………….13
4.0 Cost-plus a mark-up transfer prices……………………………………………………………………………………….14
5.0 Negotiated transfer prices…………………………………………………………………………………………………….15
6.0 Conclusion…………………………………………………………………………………………………………………………….17
1
Part a
1.0 Introduction to performance management
Most of the company, these days, grow larger and larger to survive in this competitive business environment. When they grow bigger, the complexity of its operation makes it difficult for top management to control the operation directly. (Drury, C. 2012, p.484). Hence, larger companies are divided into operational units or divisions so, that the business still moves towards its strategic objectives. (Atrill and Mclaney, 2007, p.345)
These divisions will have their own managers, who are responsible for production and marketing activities of their division. These managers will also have great autonomy to make decision for his/her division. Managers are supposed to make decisions which will benefits the company as a whole, but things are different in the real world, manager might pursue his/her own goal rather than the company main objectives. (Drury, C. 2012, p. 484) Thus, every divisional company uses some kind of financial performance measure to motivate managers to
pursue
Individual Assignment :
Task a and Task b
]
Table of Contents
Part a
1.0 Introduction to performance management …………………………………………………………………………….2
2.0 EVA and ROI ……………………………………………………………………………………………………………………………2
3.0 Mangers orientation due to using EVA and ROI……………………………………………………………………….3
4.0 Overcoming the short term nature of EVA and ROI………………………………………………………………….4
5.0 Appendix…………………………………………………………………………………………………………………………………8
Part b
1.0 Introduction of transfer pricing …………………………………………………………………………………………….11
2.0 Market Based transfer prices…………………………………………………………………………………………………12
3.0 Full cost transfer prices………………………………………………………………………………………………………….13
4.0 Cost-plus a mark-up transfer prices……………………………………………………………………………………….14
5.0 Negotiated transfer prices…………………………………………………………………………………………………….15
6.0 Conclusion…………………………………………………………………………………………………………………………….17
1
Part a
1.0 Introduction to performance management
Most of the company, these days, grow larger and larger to survive in this competitive business environment. When they grow bigger, the complexity of its operation makes it difficult for top management to control the operation directly. (Drury, C. 2012, p.484). Hence, larger companies are divided into operational units or divisions so, that the business still moves towards its strategic objectives. (Atrill and Mclaney, 2007, p.345)
These divisions will have their own managers, who are responsible for production and marketing activities of their division. These managers will also have great autonomy to make decision for his/her division. Managers are supposed to make decisions which will benefits the company as a whole, but things are different in the real world, manager might pursue his/her own goal rather than the company main objectives. (Drury, C. 2012, p. 484) Thus, every divisional company uses some kind of financial performance measure to motivate managers to
pursue
References: Drury, C. (2013). Management Accounting For Business (5th Edition). Hampshire: Cenage Learning Kaplan, R.S. and Norton D.P. (1992) the Balanced Scorecard-Measures that Drive Performance, Harward Business Review, Jan-Feb 1992, pp Proctor, R. (2012). Managerial Accounting: Decision Making and Performance Management (4th Edition) Harlow: Pearson Education Limited Quinn, M. (2011) Strategic Management Accounting (APC 309) Study Pack. Sunderland: The University of Sunderland Watson, D. and Head, A. (2010). Corporate Finance (principles and practice)(5th edition). James, W.(2013) AccountancyAge-Transfer Pricing-A Necessary Evil? [Online] Available at: http://www.accountancyage.com/aa/opinion/2281105/transfer-pricing-a-necessary-evil Ronen, J and McKinney, G. (1979) ‘Transfer Pricing for Divisional Autonomy’, Journal of Accounting Research, 8(1) spring, pp