1. Quality and Time 
    Quality refers to a wide variety of factors:
    • Fitness for use
    • Satisfies needs of customers
    • Conforms to design specifications
    • Conforms to engineering requirements
  2. Quality and Time
    The two basic aspects of quality:
    • Quality of design –measures how closely the product characteristics or services performed meet the needs and wants of consumers. Does the design meet the requirements of the consumers?
    • Conformance quality–measures the performance of a product or service according to design and production specifications. Does the product meet the design and production specifications? 

    Image Upload 2
  3. Quality and Competitiveness Advantage

    Speed to market has become one of the key competitive advantages.

    Two common measures are:
    • 1. Customer response time - the time between the placing of an order and when the customer receives the product
    • Image Upload 4
    • 2. On-time performance - percentage of times that a product or service was delivered according to or ahead of schedule
  4. The Benefits And Drawbacks of Decentralization
    • Benefits:
    • • Segregate duties
    • • Greater responsiveness to local needs
    • • Quicker decision making
    • • Increased motivation
    • • Aids management development and learning
    • • Sharpens the focus of
    • management

    • Drawbacks:
    • • Sub optimal decision making (goal incongruence)
    • • Duplication of duties
    • • Decreased loyalty to the organization as a whole
    • • Increased costs of gathering information
  5. How Different Business Units Are Evaluated
    • Consider each segment separately.
    • Divide costs into fixed and variable; and fixed costs into discretionary and non-controllable or committed.
    • Use contribution margin for short-term decisions.
    • Use variable and discretionary fixed costs to evaluate management in the short-term.
    • Use all costs for evaluating long-term decisions.
Card Set
Management accounting Notes