Management Accounting - Measue Of Qualitive Plans And Controls

6 Pages 1429 Words

Synopsis


Accounting for the qualitative aspects of manager’s plans and controls are vital to the overall assessment of any organisation. A method of measuring the qualitative aspects of a manager’s performance is known as “responsibility accounting”. Most organisations are divided into smaller sub units or departments. Responsibility accounting refers to ‘tools and concepts used to measure the performance of an organisation’s people and sub units.’ To begin with, each department is assigned a responsibility center. There are four main types of responsibility centers being cost, revenue, profit and investment centers. Once a department is assigned a responsibility center, performance reports can be composed to assess the quality of the manager’s plans and controls. Responsibility accounting can also be used to motivate the managers of the organisations.
Management Accounting II
Essay Three


“Quantitative models and qualitative models of revenues and costs for evaluation are important for measurement of managerial performance. Given that the ‘traditional’ cost accounting measures are quantitative, how can cost and management accounting begin to assess and ‘measure’ qualitative plans and controls?”

In any organisation, the measurement of both the quantitative and qualitative aspects of plans and controls are vital in the process of making management decisions. As stated in the question, traditional approaches to cost and management accounting measure the quantitative aspects of plans and controls. To measure the qualitative aspects of management performance, different approaches must be looked at to assess the plans and controls that the management puts in place.

Generally most organisations are divided into smaller units or departments. All of the separate units are assigned distinct responsibilities and each department is made up of individuals who are responsible for different tasks and ...