Managerial Accounting For Dummies

Part V

Using Managerial Accounting for Evaluation and Control

In this part . . .

You can use the budget to evaluate and control performance. After all, making budgetary plans for next year isn’t enough; you have to make sure your plan is followed. In this part, I introduce responsibility accounting — how to assign responsibility to different parts of the organization. Then I explain variance analysis, a set of techniques that identify unexpected events, measure how they affect income, and help assign responsibility for them. I also discuss the balanced scorecard, which uses a wide-ranging set of measures to determine whether a company’s strategy is in place as planned, and introduce you to the theory of constraints.