ACCT10001 · Accounting Reports And Analysis
Planning, Controlling and Evaluating
Topic 8 fills out the P-C-E framework with the tools managers actually use: planning devices (mission and strategy, performance measurement systems, budgets), the balanced scorecard's four perspectives, responsibility centres and the master budget, control devices (costing, target/life-cycle costing, CVP, incentives) and evaluation devices (variance analysis, post-project reviews). It is the second half of the exam's Case 3 (Management accounting, 10 marks), where the recurring task is mapping measures to the four balanced-scorecard perspectives and naming the responsibility centre — both exact Practice Exam patterns.
What this chapter covers
- 011. Planning devices: mission/strategy; performance measurement systems (goals → measures → targets); annual budgeting; capital investment plans
- 022. The balanced scorecard's four perspectives: Financial, Customer, Internal Business Processes, Learning & Growth (with cause-and-effect links)
- 033. The master budget: sales → operating + cash + capex budgets → budgeted financial statements
- 044. Budgeting styles: top-down vs bottom-up; challenging-but-attainable targets; zero-based, incremental, activity-based, flexible, static vs rolling
- 055. Responsibility centres: cost centre, revenue centre, profit centre, investment centre (what each manager controls)
- 066. Control devices: organisational structure; costing systems (job, process, ABC, standard); strategic cost management (target costing, life-cycle costing, CVP)
- 077. Break-even: break-even units = fixed costs ÷ (unit price − unit variable cost); target cost = market price − required profit
- 088. Evaluation devices: variance analysis (variance = actual − planned), non-financial measures, investment measures (ROI, RI, EVA), post-project reviews
Map measures to balanced-scorecard perspectives and name the centre (Case 3)
- 1 mark(i) RevPAR is a revenue/profitability outcome → Financial perspective.
- 1 mark(ii) Guest review score reflects satisfaction/loyalty → Customer perspective.
- 1 mark(iii) Room-turnaround time is the efficiency of a core operational process → Internal Business Processes perspective.
- 1 mark(iv) Cross-training hours invest in employee capability (a leading indicator) → Learning & Growth perspective.
- 1 mark(b) Accountable for revenues AND costs but not the asset base → a profit centre (an investment centre would also be accountable for invested assets).
Key terms
- Balanced scorecard (BSC)
- A performance measurement system with four linked perspectives — Financial (“how do we appear to shareholders?”), Customer (“how do we appear to customers?”), Internal Business Processes (“what must we excel at?”) and Learning & Growth (“how will we sustain change?”) — combining financial and non-financial, leading and lagging measures with cause-and-effect links.
- Responsibility centre
- An organisational unit defined by what its manager controls: a cost centre (costs only), a revenue centre (revenues only), a profit centre (both revenues and costs) or an investment centre (profit plus the assets invested). The ladder rises in scope of accountability.
- Master budget
- The interrelated set of budgets that flows from a sales/fees forecast into operating budgets (expenses, production, inventory) plus a cash budget and a capital expenditure budget, culminating in budgeted financial statements.
- Cost-volume-profit (CVP) and break-even
- CVP analysis links cost, volume and profit. Break-even units = fixed costs ÷ (unit price − unit variable cost) — the volume at which contribution covers fixed costs and profit is zero.
- Target costing
- A strategic cost-management technique that works backward from the market: target cost = market price − required profit. The product is then designed to be made within that cost.
- Variance analysis
- An evaluation device where variance = actual − planned. Cost variances split into price and efficiency variances; sales variances into volume, price and mix. A favourable variance is not always good and an unfavourable one is not always bad — context matters.
Planning, Controlling and Evaluating FAQ
How is Topic 8 examined in ACCT10001?
Topic 8 is the second half of the exam's Case 3 (Management accounting, 10 marks). The recurring exact patterns are mapping a set of measures to the four balanced-scorecard perspectives (Practice Exam Q8) and identifying the type of responsibility centre, alongside Topic 7's planning/controlling/evaluating and value-chain classifications.
What are the four balanced-scorecard perspectives?
Financial (how the firm appears to shareholders — money outcomes), Customer (how it appears to customers — satisfaction and loyalty), Internal Business Processes (what it must excel at operationally) and Learning & Growth (how it sustains the ability to change — people and capability). They are linked by cause and effect and mix financial with non-financial, leading with lagging, measures.
What is the difference between a profit centre and an investment centre?
A profit centre's manager is accountable for both revenues and costs (and therefore profit), but not for the assets invested in the unit. An investment centre's manager is accountable for profit AND the assets invested, so their performance is judged on returns relative to the asset base (for example ROI or residual income). The ladder runs cost → revenue → profit → investment by widening scope.
How do I calculate break-even in ACCT10001?
Break-even units = fixed costs ÷ (unit price − unit variable cost), where the denominator is the contribution margin per unit. It is the sales volume at which total contribution exactly covers fixed costs, so profit is zero. A related strategic tool is target costing, where target cost = market price − required profit.
Exam move
Case 3 rewards confident classification and a little arithmetic, so split your prep. For classification, drill the balanced scorecard until each measure snaps into one of the four buckets (Financial = money, Customer = satisfaction, Internal Processes = operations, Learning & Growth = people/capability) and the responsibility-centre ladder (cost → revenue → profit → investment) is instant. For arithmetic, memorise break-even units = fixed costs ÷ (price − unit variable cost) and target cost = market price − required profit, and be able to set up a simple variance (actual − planned). Sketch the master-budget flow once so you understand how the pieces connect. Rehearse the Practice Exam's WinterWear-style questions, because the 10-mark case is built from exactly these mapping tasks.
