ACC 406 Lecture Notes - Lecture 7: Management Control System, Income Statement, Lean Accounting
16 Dec 2017
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Document Summary
Performance measurement: the process by which managers at all levels gain information about the performance of tasks within the firm and judge that performance against pre-established criteria as set out in budgets, plans, and goals. Management control: refers to the evaluation of the performance of mid-level managers by the upper-level managers. Operational control: refers to the evaluation of operating-level employees by mid-level managers. In a management-by-objectives approach, top management assigns a set of responsibilities to each mid-level manager depending on the functional area involved and the scope of authority of the mid-level manager. Strategic business unit (sbu): consists of a well-defined set of controllable operating activities over which an sbu manager is responsible. Employment contracts: is an agreement between the manager and top management designed to provide incentives for the manager to act independently to achieve top managements objectives. Principal-agent model: is a conceptual model that contains the key elements that contracts must have to achieve the desired objectives.
