BA MT

-        Amt charge when 1 division sells product or services to another division

-        Affects profit of buying & selling division therefore it affects the performance evaluation of responsibility centers

-        Managers has given autonomy to make decisions for subunits

-        Advantage: nagagamit o yung knowledge & skills ng manager mo so no need n magdirect si top management sa day-to-day operation

-        Challenge: obtain goal congruence among org managers

-        Managers set goal na iaachieve nila. These goals are expressed in financial or other quantitative terms

-        used to record transactions for use of internal & external users

-        most common investment center performance

-        Account: income & capital invested, sales revenue

-        To know how effective the company used its invested capital to earn profit

-        It is not about how much profit it earned but how much profit it generated with the invested capital

measures percentage of each sales dollar that remains as profit after all expense are covered

number of sales dollar generated by every dollar of invested capital

-        increase income=increase sales reveue or lessen expenses

increase sales revenue or reduce invested capital (inventories- reduced= stockouts & lost sales ; crowded aisle = drive customer away

cost of acquiring investment capital. Depends on riskiness of investment which funds will be used