Management Control Systems Chapters 16 & 17 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH, 2007

Types of control Personal control −P−Personnel, cultural & social means of control Results control −C−Control the output of the operations Action control −C−Control the behaviour of the employees

Cybernetic control system Figure 16.1 page 649

Responsibility centers Cost center −S−Standard and discretionary Revenue center Profit center Investment center RResponsibility accounting −T−The controllability principle

Contingency theory External environment −U−Uncertain or certain −S−Static or dynamic, turbulent or calm −S−Simple or complex Strategies −L−Low cost or differentiation −D−Defender or prospector −B−Build/hold/harvest/divest Observability −O−Of output, input, transformation and behaviour Technology −S−Small/large batch, process production, mass production −P−Pooled, sequential or reciprocal interdependence Business unit −F−Firm size −S−Single product, related or unrelated diversified −O−Organizational structure −I−Industry variables Exhibit 17.1 page 697

Purposes of accounting Rational and instrumental Symbolic Political and bargaining Legitimate and retrospective rationalizing Repressive, dominating and ideological b Figure 17.4 page 710

Next, we… explore how the volume of the operations affect the revenues and costs of the organization. We also start our discussion about activity- based costing Chapters 8 & 10