Controlling Costs

 

egarding my past career, the financial budget was constructed with strategy and planning on how to achieve the end result. Budgeting revenue numbers is mostly a “targeted” attempt to guesstimate based on trends, external and internal happening (Datar, 2014).In thinking about the managerial area of responsibility: a cost center that focuses on only keeping costs in line like the maintenance area, the customer focused area deals with revenue but usually deals with costs too which makes it a profit center or the investment area that deals with investments, revenues and costs (Datar, 2014). Yes, a manager of any of these areas of responsibility is concerned with their focus which in turn would motivate their direct reports to also focus on those costs, sales and profits (Datar, 2014). Whatever is generally measured gets the attention. Thus, if a manager’s evaluation is majorly tied to their financial numbers it can negatively impact their behaviors. In my humble opinion and referenced in the textbook, the total focus on financial numbers never tells the entire story (Datar, 2014).In every evaluation that I was given plus gave in my past career the financial numbers were a part of the story, but controllability behaviors and strategy by the manager was part of the process as well. Now I know that this is described as responsibility accounting (Datar, 2014). To gather that knowledge about past performance upper management has to reply on numbers within the control of the manager but how they work with their direct reports on sales, training, repair, coaching or whatever was in their area of responsibility. Part of the issue with too much focus on direct reports was again whatever they were measured on would be their focus. Tying all the departments together works to support the entire process of building revenue, controlling costs and creating profits. This is the positive part of creating responsibility***half page two references for more information on Controlling Costs check on this:https://en.wikipedia.org/wiki/Cost_accounting

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