Strategies And Performance Measurement Is Essential For A Business Manager

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Strategy and performance measurement is co-related. Statistical information is essential for a business manager to make rational decisions. Corporations apply Business Performance Management Systems for diverse reasons. The most predominant use of measurement is to help a business have control over a firm in a way that traditional accounting processes did not provide. Decision-making is a fundamental component of corporate realization. Decisions that are based on the basis of substantial knowledge may lead to a business’s improvement as well as increased long-term performance. The focus of this paper is to respond to prompts on measurement and decision-making. Task 1: Cost Behaviours and Cost Classifications Cost behaviour is the…show more content…
In an income statement, manufacturing overhead costs are reported as the total cost of producing all units as the costs of goods sold. In a balance sheet, manufacturing overhead costs are reported within the asset inventory account. It is important to note that the decision on the method of cost allocation is left to an individual company (Accounting Tools, 2016b). Maria Crane’s argument that manufacturing overhead costs should be reported as inventory costs until sold is uninformed. Her argument does not consider segment reporting in the various measures of the businesses manufacturing process. The argument thus does not allow the measurement and quantification of the contribution margin obtained from the sale of the company’s products manufactured at a particular time. In addition, her recommendation does not give segmented data the ability to be reported on an external basis thus allowing the evaluation of residual income (Accounting Tools, 2016a). It is important to note that if there are no sales during a reporting period, the contribution margin on the income statement will have a zero contribution margin. As sales increase, contribution margins also increase while the fixed costs remain
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