Management Planning and Control Systems AKADMS 4570 3'0

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Management Planning and Control Systems AK/ADMS
4570 3.0
Budgeting Operative Capital
Performance Measurement
Transfer Prices
Cost Allocations
Governance Mechanisms
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Budgeting Planning
Performance Measurement
Cost Allocations
Transfer Prices
Governance Mechanisms
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Management Planning and Control Systems
Why so far we only considered Budgeting, Cost
Allocations and Performance Measurement, but not
Transfer Prices?
Single business units
Managers responsible for
Revenues Variable and Fixed Costs
Profit
Assets Investments
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Management Planning and Control Systems
When we need to consider Transfer Prices and Cost
Allocations?
Various business units form a company
Product or services transferred between them
Each business unit is a profit center
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Management Planning and Control Systems
Type of Responsibility Centers
Revenue Center
Cost Center
Profit Center
Investment Center
Need to develop measures of performance according
to each type of responsibility center
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Management Planning and Control Systems
Why we need to consider Transfer Prices and Cost
Allocations?
Allocate profit between business units
Measure the performance of each business
Align business managers decisions with the
company goals
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Management Planning and Control Systems
Type of Transfer Prices
Market Prices
Variable, Fixed or ABC Cost Based Actual or
Standard Including or not Profit
Negotiated Prices
Dual Pricing
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Management Planning and Control Systems
Relationships of Transfer Pricing with other
Planning and Control Systems
Transfer Prices
Budgeting
Type of responsibility center Transfer and
pricing policy
Cost Allocations
Inputs Divisional plans
Divisional and personal responsibility. Goal
alignment
Performance Measurement
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Phases of Management Planning and Control Systems
Design in Joint Ventures
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Management Planning and Control Systems
When measuring Inputs we have to pay attention if
they are Outputs of another division or come from
the market.
When measuring Outputs we have to pay attention
if they are Inputs of another division or go to
the market.
Consider internal and external markets
implications
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Performance Measures (1 Effectiveness and 2
Efficiency)
Internal External Revenue Cost Profit Inve
stment

• Total shipments
• Sales per employee

• Market share
• Return on publicity

• Headcount
• Hourly average salary

• Direct materials costs
• Scrap

• Net profit growth
• Quality costs

• Contribution margin
• Margin on sales

• Market value
• EVA

• Net profit
• ROA

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First Evaluation of the course ADMS 4570
2.86 Teachers Encouragement of Questions
and Discussion, and Openness to
Opinions of Other
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Quiz Time

• 20 minutes
• Remain silent
• Do not cheat
• Classes re-start in 30 minutes
• Get ready to discuss the case of Birch Paper Co.