Performance Evaluation

What are responsibility centers? What does each do and how is each evaluated?

Flex budget: how constructed and used

Variance Analysis: Calculating and interpreting

• what variance is favorable? Unfavorable?
• How does a flexible budget facilitate variance analysis?
• How does disaggregating a variance (e.g. into sales volume and sales price variances) help in evaluating performance?

How to evaluate alternative uses of resources using ROI and Residual Income

• Calculate and interpret each