What Are Some of the Limitations of Utilizing ROI, Residual

question 64

Essay

What are some of the limitations of utilizing ROI, residual income, and EVA to measure the performance of investment centers?

Understand the basic concepts and definitions of standard costing, including direct labor, efficiency standards, and standard costs.

Differentiate between ideal standards and normal standards and their impact on variances.

Recognize how standard costs are implemented and utilized within the general ledger and accounting systems.

Appreciate the process and complexity involved in setting standard costs, including the roles of various departments.

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Definitions:

Human Error

Mistakes made by people, especially in operating machinery or computing devices, often leading to accidents or data loss.

Unintentional

Unintentional refers to an action or outcome that occurs without intention or planning, often leading to unplanned results or accidents.

Information Resource

Data, information, or knowledge assets that can be utilized to make decisions, support processes, or create value in various forms.

Threat

Any danger to which an information resource may be exposed.