Page 155 - BA2 Integrated Workbook - Student 2017

Preparing accounts and reports for management

Preparing reports for a range of

organisations

2.1 The usefulness of reports

The usefulness of any management report is greatly enhanced if it highlights
subtotals, totals and performance measures that are relevant to the recipient.

This enables the manager who receives the information to focus on the
most relevant information from the point of view of management action.
The same information may be used in reports to different managers but it
may be presented with different sub totals to highlight different points of
interest.

2.2 Controllability

A performance measure will be particularly relevant if it is controllable by the
manager for whom the report is prepared, that is if the manager is able to take action
to influence the measure, and if an improvement in the performance measure would
improve the performance of the responsibility centre or the organisation overall.

Controllable costs are generally assumed to be variable costs, and directly
attributable fixed costs. These are fixed costs that can be allocated in full to a cost of
the centre. However this assumption is not entirely correct and it should be used with
caution. Some items treated as variable costs cannot be influenced or controlled in
the short term.

It is important to remember that an item that is uncontrollable for one manager could
be controllable by another.

In the long term, all costs are controllable.

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