Chapter 14 Operational Performance Measurement: Sales and Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

26317 Words Nov 27th, 2012 106 Pages
Chapter 14
Operational Performance Measurement: Sales and Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Case

14-1: Pet Groom and Clean Company

Readings

14-1: “Standard Costing Is Alive and Well at Parker Brass” by D. Johnsen and P. Sopariwala, Management Accounting Quarterly (Winter 2000), pp. 12-20.

The Brass Products Division of the Parker Hannifin Corporation is a world-class manufacturer of tube and brass fittings, valves, hose, and hose fittings. Despite the introduction of popular new costing systems, the Brass Product Division operates a well-functioning standard costing system.

Discussion Questions:

1. What features in the firm's standard costing that make it a success?
2. In addition to
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The Fernandez Company example requires students to first calculate the total flexible budget variance (in operating income) for a period and then breakdown this variance into its constituent parts (selling price variance, various cost variances, etc.).

Discussion Questions:

1. What is meant by the total operating-income variance for a given accounting period? What alternative names are there to describe this variance.
2. What would be a first-level breakdown of the total variance described above in (1)?
3. How can the total flexible-budget variance be broken down (i.e., what are the constituent parts of this total variance)?
4. Explain the total sales volume variance for a period. How can this total variance be decomposed?
5. Explain the meaning of the joint price-quantity variance that is the basis for the discussion in the Roger Company case.

14-5: Are ABC and RCA Accounting Systems Compatible with Lean Management? by Larry Grasso, Management Accounting Quarterly, Vol. 7, No. 1 (Fall 2005), pp. 12-27.

This paper provides a critical analysis of several alternative cost systems to traditional cost accounting systems. It then evaluates these alternatives in terms of how they might support, or not, companies that adopt a lean philosophy. An example of nonfinancial performance indicators that support a lean philosophy is offered in Tables 1 and 2. This discussion in the article of the historical development of management accounting systems

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