Page 203 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems

Notes 9.8 Summary

 Performance measures are a central component of management information and reporting
system.

 In a revenue centre, revenues are measured in monetary terms, but expenses are not
matched with these revenues. Branch sales offices often are revenue centres.

 The performance report system should be structured to the organization structure of the
enterprise the same way as budgeting and accounting systems.
 Just-in-time, as the name indicates, means at the extreme there are zero inventories, and
goods are produced or ordered only when they are needed.

9.9 Keywords

Balanced Score Card: It is a device of linking financial and non-financial measures and identifies
key performance measures that give top management, a first but comprehensive view of the
performance of the organization unit.
Economic Value Added (EVA): Economic Value Added (EVA) is the amount in rupees that remains
after deducting an "implied" interest charge from operating income.
Implied Interest Charge: The implied interest charge reflects an opportunity cost, and is charged
on the amount of assets in each investment centre.

Just-in-time: Just-in-time means at the extreme there are zero inventories, and goods are produced
or ordered only when they are needed.
Performance Measures: Performance measures are a central component of management
information and reporting system.
Value Propositions: Value propositions may be defined as the attributes, the supplying
companies provide through their products and services to create loyalty and satisfaction in
targeted customer segments.

9.10 Review Questions

1. Why is performance measurement required in Management Control System?
2. What are the financial performance measures?
3. What are the non-financial performance measures?
4. What are the information relationships at various levels of management?
5. How can accounting based performance measure be designed?

6. How just-in-time technique influences Management Control Process?
7. How does Computer Integrated Manufacturing influence Management Control Process?
8. What is benchmarking and benchtrending? Describe the process in benchmarking.

9. Explain with the help of diagram the Balance Score Card. Explain, why it is called a
Balance Score Card and what are its limitations.

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