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Chapter 24: 13E (page 1324)

Well-designed performance evaluation systems accomplish many goals. Describe the potential benefits performance evaluation systems offer.

Short Answer

Expert verified

The performance evaluation system helps the management in goal congruence and coordination, effective communication, motivates segment managers and setting standards.

Step by step solution

01

Definition of the Performance Evaluation system

The performance evaluation system is defined as the guide which helps the management of the organization to control their business effectively.

02

Type of Responsibility center

The potential benefits of a performance evaluation system in an organization are as follows:

  1. It helps in the promotion of goal congruence and coordination
  2. Performance evaluation system contributes toward the effective communication in the company
  3. It also motivates the segment managers of a company in order to attain their targets which are set by the management
  4. It helps in setting up standards to determine the competitive positions of the organization.

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Most popular questions from this chapter

Refer to the information in Short Exercise S24-7. Compute each division’s RI. Interpret your results. Are your results consistent with each division’s ROI?

Well-designed performance evaluation systems accomplish many goals. Consider the following actions, and state which goal is being achieved by the action:

a. Comparing targets to actual results

b. Providing subunit managers with performance targets

c. Comparing actual results with industry standards

d. Providing bonuses to subunit managers who achieve performance targets

e. Aligning subunit performance targets with company strategy

f. Comparing actual results of competitors

g. Taking corrective actions

h. Using the adage “you get what you measure” when designing the performance evaluation system

Match the responsibility center to the correct responsibility report.

Responsibility Centers

Responsibility Reports

14. Cost center

a. Includes flexible budget variances for revenues and costs.

15. Revenue center

b. Includes flexible budget variances for costs.

16. Profit center

c. Includes flexible budget variances and sales volume variances for revenues.

What is a key performance indicator?

Question: How is RI calculated?
See all solutions

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