Fundamentals of Performance Management

Author: Tom Coghlan

CPE Credit:  2 hours for CPAs

A common misconception about performance management is that focuses on “what happened”, providing internal information via dashboards with drill down capability, with an emphasis on "slicing and dicing" past performance data

In reality performance management is really all about performance improvement, using analytics to go beyond "what happened" to "why did it happen" and then to "how can we influence what will happen"

In this course we will start by building the foundation for good performance management through responsibility centers and contribution margin analysis. We'll discuss how Activity Based Costing and the Balanced Scorecard can be utilized and discuss issues such as cost allocation and transfer pricing. Finally, we will explore the use of predictive analytics.

Publication Date: April 2019

Designed For
Financial officers, controllers and chief financial officers; financial, managerial and cost accountants; financial and business analysts; budget managers and analysts; risk managers; chief information officers and information technology professionals.

Topics Covered

  • Cost Volume Profit (CVP) Analysis
  • Responsibility Centers
  • Internal Profitability Analysis
  • Incremental analysis
  • Activity based costing
  • The Balanced Scorecard
  • Transfer pricing

Learning Objectives

  • Identify and explain different types of responsibility centers
  • Identify segments that organizations evaluate, including product lines, geographical areas, sales regions, customers, etc.
  • Recognize how to demonstrate the use of a contribution margin segment statement to evaluate responsibility centers
  • Differentiate the issues with common cost allocation
  • Identify the advantages and disadvantages of the methods of transfer pricing
  • Differentiate between traditional overhead allocation and Activity Based Costing (ABC)
  • Recognize elements of ABC such as cost pool, cost driver, activity driver, resource driver, and non-value-added activity, and the linkage between activities and cost pools
  • Identify the relationships between the strategic plan, key performance indicators, and the balanced scorecard
  • Identify and describe the characteristics of a successful implementation and use of a balanced scorecard
  • Describe the use of non-financial and third-party data to develop predictive analytics
  • Identify the steps in determining the break-even point
  • Differentiate cost behavior and cost control
  • Describe examples of non-controllable fixed cost
  • Identify conditions where activity-based costing helps
  • Identify the steps in implementing activity-based costing
  • Recognize and apply the preferred method of transfer pricing since it is easy to justify by referencing sales to third parties
  • Identify the appropriate equation for calculating contribution margin
  • Identify reasons to allocated fixed costs
  • Identify which relationships to objectively allocate overhead using cost drivers that cause costs to occur
  • Describe a type of cost pool
  • Identify an example of a non-value-added activity
  • Identify potential roadblocks to implementing activity-based costing

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Business Management & Organization (2 hours)

Program Prerequisites
None

Advance Preparation
None

Registration Options
Quantity
Fees
Regular Fee $55.00

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