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17 Cards in this Set
- Front
- Back
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balanced scorecard
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A performance evaluation approach that incorporates multiple performance dimensions by combining financial and nonfinancial measures.
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controllable expenses
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Costs that can be influenced by the decisions of a manager.
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controllable revenues
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Revenues earned by the profit center.
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cost center
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A decentralized unit in which the department or division manager has responsibility for the control of costs incurred and the authority to make decisions that affect these costs.
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cost price approach
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An approach to transfer pricing that uses cost as the basis for setting the transfer price.
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DuPont formula
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An expanded expression of return on investment determined by multiplying the profit margin by the investment turnover.
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investment center
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A decentralized unit in which the manager has the responsibility and authority to make decisions that affect not only costs and revenues but also the fixed assets available to the center.
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investment turnover
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A component of the rate of return on investment, computed as the ratio of sales to invested assets.
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market price approach
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An approach to transfer pricing that uses the price at which the product or service transferred could be sold to outside buyers as the transfer price.
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negotiated price approach
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An approach to transfer pricing that allows managers of decentralized units to agree (negotiate) among themselves as to the transfer price.
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profit center
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A decentralized unit in which the manager has the responsibility and the authority to make decisions that affect both costs and revenues (and thus profits).
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profit margin
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A component of the rate of return on investment, computed as the ratio of income from operations to sales.
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rate of return on investment (ROI)
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A measure of managerial efficiency in the use of investments in assets, computed as income from operations divided by invested assets.
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residual income
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The excess of divisional income from operations over a “minimum” acceptable income from operations.
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responsibility accounting
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The process of measuring and reporting operating data by areas of responsibility.
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service department charges
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The costs of services provided by an internal service department and transferred to a responsibility center.
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transfer price
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The price charged one decentralized unit by another for the goods or services provided.
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