Management by Objectives (MBO) Is One Way That Managers Can

question 54

Essay

Management by objectives (MBO) is one way that managers can use to evaluate the performance of subordinates. Discuss the steps involved in using this technique.

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Definitions:

Variable Costing

An accounting method that only allocates variable costs to inventory, treating fixed costs as expenses of the period.

Absorption Costing

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Operating Income

Operating income is the profit realized from a company's regular business operations, excluding deductions of interest and taxes, as well as any gains or losses from non-operating activities.

Direct Costing

A cost accounting method where only variable costs (direct materials, direct labor, variable manufacturing overhead) are included in product costs, fixed overhead costs are expensed in the period they are incurred.