Управленческий учет на предприятии

* it is supposed that its management will use the methods of decisions based on profitability;

* its management is accountable to the top management for the sum of got profit.

Such centers of profit usually are called as the strategic organizational units (SOU).

4) Investment center. The center of investments is the center of responsibility in which the managing director is responsible not only for profits, but also for level of investments. Rice and Cool (1978) define the center of investments as: «division of the organization responsible before the top management for its profitability depending on investment base of division»

The managing director estimate on his activity and level of achievements. The indicator most often used in an assessment of the centers of investments, the profit on an investment or residual profit which is calculated by subtraction of change in the capital from profit of this division is.

4.2 The account on the centers of expenses

The center of expenses is any unit of activity of the organization allocated in the account for control of expenses of this unit. It is supposed that in this unit it is possible to organize rationing, planning, the accounting of the used resources, an assessment of their use and to define responsible for expenses.

The center of expenses can be a separate workplace (for example, on assembly of any object), separate production operation or some operations having the identical characteristic, the separate machine or group of machines, crew, a site, shop or other part of the organization; the corresponding organizational unit can be subdivided into the separate centers of expenses. Basis of allocation of the centers of expenses is the unity of performance of operations and functions and the used equipment.

The choice of the centers of expenses depends on organizational and other features of the organization, and also on the purposes put by its management. It is necessary to consider that with increase in the centers of expenses efficiency of control of expenses increases with simultaneous increase in expenses at maintaining the account. Managers have to establish an optimum combination of expenses for maintaining the account to effect of control of expenses on each center of expenses.

Direct costs consider on the centers of expenses on the basis of primary documents in which put down codes of expenses. Indirect expenses on the centers share on two look:

* directly relating to this center of expenses;

*distributed from other centers of expenses.

Some organizations carry only those overhead costs which arise in this center on center expenses. The rate of overhead costs is determined by such centers by division of the sum of overhead costs into production volume (works, services) this center which can be expressed in terms of products of their cost cheloveko-or machine-hours, a direct salary. Other overhead costs in such organizations distribute on the corresponding rates, passing the centers of expenses.

In the organizations distributing overhead costs of both types, apply rates of distribution of overhead costs by types of overhead costs.

Efficiency of functioning of the centers of expenses in many respects depends on contents of reports on the centers of expenses. The basic principles of this reporting are:

* inclusion in the report of only controlled expenses;

* integration of indicators of the reporting on the centers for an ascension measure from the lowest level of management to the highest;

* inclusion in the report of information on the deviations, allowing to realize the principle of management by exception. The essence of the principle of management by exception is in the assumption that the manager of higher level of management doesn't have need quickly to supervise separate expenses and the income of the centers of responsibility of the lowest levels of management if their sizes significantly don't differ from the set. If deviations on expenses and the income are essential (usually more than 5%), the additional information explaining arisen deviations in the relevant center of responsibility is submitted to managers of higher level of management. On the basis of additional information the manager makes decisions within the powers or presents the relevant information to the higher head.

The example of drawing up reports is given by the centers of expenses of various level in tab. 4.1.

Controlled expenses	Expense	Deviations on expenses (+,-)
	according to the estimate	actually	in a month	since the beginning of year
Report of the master of office No. 1
1. Materials	100	98	-2	-1
2. Salary direct	50	51	1	+0,5
3. Salary of serving workers	22	22,5	+0,5	+0,3
4. Fuel and energy on the technological purposes	18	19	1	+0,7
5. Operation and equipment repair	20	19,5	-0,5	-0,5
6. Other expenses	10	10,5	+0,5	-0,3
7. Total expenses	220	220,5	+0,5	-0,3
Report of the foreman No. 1
1. Maintenance of management personnel	40	41	1	-
2. Maintenance of the other shop personnel	30	29	-1	-2
3. Content of maintenance of the building, constructions, stock	100	102	2	-1
4. Non-productive costs	X	2	2	5
5. Other expenses of shop	30	29	-1	-3
6. Total shop expenses	200	203	3	-1
7. Expenses of offices
№1	220	220,5	+0,5	-0,3
№2	200	205	5	7
№3	280	278	-2	-3
Total expenses of offices	700	703,5	+3,5	+3,7
8. All expenses on shop	900	906,5	+6,5	+2,7
Report of the deputy director on economy
1. Expenses on management of the organization	200	206	6	10
2. General running costs	200	195	-5	-7
3. Taxes, collecting and assignments	100	100	-	1
4. Non-productive costs	X	50	50	100
5. Total - the general expenses on the organization	500	551	51	104
6. Expenses of shops:
№1	900	906,5	+6,5	+2,7
№2	800	790,5	-9,5	-2,7
№3	1000	1005	5	10
Total:	2700	2702	2	10
7. All organization expense	3200	3253	53	114

In the provided reports the actual expenses are compared with expenses according to the estimate and deviations on expenses pay off. For establishment of dynamics of deviations on months data on deviations are provided in the table since the beginning of year.

For example, on an other expenses in office No. 1 for the current month the overexpenditure on 0,5 thousand tenges is allowed. However since the beginning of year under this article the economy for the sum of 0,3 thousand tenges is received. therefore the overexpenditure of reporting month can be justified.

At an assessment of deviations on separate expenses the special attention should be paid on non-productive costs of shops and the organization as a whole, losses from idle times, losses from shortages and damage of material values, loss from marriage, etc. Non-productive costs in the estimate aren't reflected.

By drawing up the report on execution of the estimate of expenses on the organization as a whole it must be kept in mind that for the head of the organization and his deputy on economy all expenses are controllable. Therefore data on the general running costs received according to the accounting financial account are provided in the report on execution of the estimate of expenses on the organization.

At definition of the centers of expenses, an order of the accounting of expenses on them, contents of reports on execution of the estimate of various levels and an assessment of deviations from the estimate it is expedient to use industry instructions on planning, the account and calculation of product cost, and also industry methodical indications for the analysis of economic activity of the organizations.

4.3 The account and the reporting on the profit centers

Shops, productions, sales departments (marketing) and other divisions of the organization which heads are responsible can be the centers of profit and possess powers both on expenses, and according to the income. The organization acts as the center of profit as a whole also.

The reporting document on expenses of the center of profit are the reports considered earlier on execution of the estimate of the centers of expenses of the highest levels (usually since shop level).

The main reporting document of the center of profit is the I report on the profit which contents depends on indicators of profit included in the report - gross, from sales, from usual activity, to the taxation, pure or the marginal income.

1) Profit center reports on gross profit, in the report reflect the cost of made production (works, services), costs of production of this center, making its production prime cost, and the estimated size of gross profit. The report can be formed in a form.

By drawing up the report on gross profit it is necessary to consider that the organizations can according to the accepted accounting policies to include general running costs in structure of production prime cost or to write off them for the «Sale» account; in the first case the indicator of production prime cost in the report is defined with general running costs, and in the second case - without the specified expenses. General running costs in the second case will be considered by drawing up the report on profit on sales.

In that case when the center of profit reports on profit on sales, data on expenses on production sale are provided in the report (works, services) and the corresponding part of general running costs (if they don't join in production prime cost), allowing to estimate full prime cost of sold production (works, services) and profit on organization sales in addition.

Table 4.2. - The report of the center on profit in a month, thousand, tenges

Indicators	According to the estimate (plan)	Actually	Deviations (+,-)
			in a month	since the beginning of year
Report on gross profit
1. Production cost (works, services)	1000	1200	200	300
2. Production prime cost	600	700	100	150
3. Gross profit (item 1 - item 2)	400	500	100	150
Report on profit on sales
1. Sales proceeds (net)	1000	1200	200	300
2. Production prime cost	600	700	100	150
3. Expenses on sale	50	60	10	30
4. General running costs	150	160	10	20
5. Full prime cost of sold production (item 2 + item 3 + item 4)	800	920	120	200
6. Profit on sales (item 1-p.5)	200	280	80	100
Report on profit on usual activity
1. Sales proceeds (net)	1000	1200	200	300
2. Production prime cost	600	700	100	150
4. General running costs	50	60	10	30
4. General running costs	150	160	10	20
5. Full prime cost of sold production (item 2 + item 3 + item 4)	800	920	120	200
6. Profit on sales (item 1 - item 5)	200	280	80	100
7. Operating and non-operating income	100	120	20	30
8. Operating and non-operating expenses	80	100	20	15
9. Profit to the taxation (item 6 + item 7 - the item 8)	220	300	80	115
10. Profit tax	52,8	72	+19,2	+27,6
11. Profit (loss) on usual activity (item 9 - item 10)	167,2	228	+60,8	+87,4

By drawing up the report on profit on usual activity in the report include data on the operating and non-operating income and expenses and the profit tax sum.

The profit sum to the taxation determine by addition to profit on sales of the operating and non-operating income and subtraction from the received sum of operating and non-operating expenses.

In the financial account the operating and non-operating income and expenses are reflected in the synthetic account «The other income and expenses». Thus gained income considers on the account credit, and expenses - on the debit of this account.

The analytical account on the account is kept on each type of income and expenses. Thus creation of the analytical account according to the other income and the expenses relating to the same financial economic operation, has to provide possibility of identification of financial result of each operation.

At the solution of a question on expediency of inclusion of the operating and non-operating income and expenses in the report on profit it must be kept in mind that only small part of the specified income and expenses has a direct bearing on the centers of profit and can be carried on the centers by a direct way.

The main part of the operating income and expenses has the centralized character and is distributed on the profit centers in the indirect ways. At unsuccessfully chosen base of distribution of such operating income and expenses they can significantly distort indicators of profit of the relevant centers.

At the same time inclusion in the reporting of the centers for profit uncontrollable managers of the centers of the operating income and expenses can have and positive value as they have an interest in an assessment of validity of operating and non-operating expenses.

As one of options of drawing up the report on the center of profit it is possible to recommend inclusion in it only that operating and non-operating income and expenses which have a direct bearing on the relevant center.

According to poll of 85% of the American companies carried out in 1981 distributed some operating expenses on the profit centers; in 1989 from 100 multinational corporations of 30,5% distributed administrative expenses of headquarters; 29,5% - percent on debt; 16,2% - profit taxes.

Instead of the report on profit the centers of profit can make reports on the marginal income.

The marginal income as it was already noted, determine by subtraction from proceeds from sales of production (works, services) the variable expenses connected with production and sale to production. The difference between the marginal income and constant expenses is called as the residual income. Thus it is expedient to estimate the residual income taking into account both direct, and indirect constant expenses.

Constant expenses are divided on direct and indirect depending on specific conditions of production.

For example, if the equipment is used only for production of a certain type of production, all expenses on service of this equipment (a salary of the workers serving the equipment, the depreciation sum on the equipment, the sum of rent payments on it, etc.) are straight lines.

To indirect constant expenses carry expenses, which distribute between types of production (works, services) only a settlement way - maintenance costs of administration, the depreciation sum on buildings, etc.

The example of drawing up the report on the marginal income is given in tab. 4.3.

Table 4.3 - The report of the Center of profit on the marginal income in a month

Indicators	According to the estimate (plan)	Actually	Deviations (+,-)
			in a month	since the beginning of year
1. Sales proceeds (net)	1000	1200	200	300
2. Variable expenses	500	600	100	200
3. The marginal income (item 1 - item 2)	500	600	100	100
4. Direct constant costs	200	210	10	20
5. The residual income (to indirect expenses)	300	390	90	80
6. Indirect constant expenses	100	110	10	20
7. The residual income (profit on production) (item 5 - item 6)	200	280	80	60

The residual income to indirect expenses, as a rule, allows to estimate activity of the center of profit more precisely, than it can be done, using an indicator of the residual income as this indicator doesn't contain those inaccuracies which arise at distribution of indirect expenses.

The report on the marginal income can be added with indicators of the operating and non-operating income and expenses on the basis of which it is possible to define net income of the center of profit.

As a whole on the organization For reporting month it is expedient to make the report on profit in a form of the report on profit as a part of accounting (financial) reports with inclusion in the report of indicators on the estimate and deviations in a month and since the beginning of year.

Indicator of net profit (loss) in the report determine by addition to profit (loss) on usual activity of the extraordinary income and subtraction from the received sum of extraordinary expenses.

The receipts arising as consequences of circumstances of economic activity belong to the extraordinary income (natural disaster, a fire, accident, nationalization, etc.): insurance compensation, cost of the material values which have remained from write-off of unsuitable to restoration and further use of assets, etc.

The receipts arising as consequences of force majeure, credit on the debit of material, settlement and other accounts from the account credit «Profits and losses».

For example, the cost of the material values which have remained from write-off of property which has become useless on force majeure, «Materials» from the account credit credit on the account debit.

In compliance as a part of extraordinary expenses reflect the expenses arising as consequences of force majeure of economic activity (natural disaster, a fire, accident, property nationalization, etc.).

Losses and the expenses connected with force majeure, write off in the account debit from the credit of accounts of material values (the consequences of force majeure lost or spent at elimination), calculations with the personnel on compensation (on the workers occupied with natural disaster response), money, etc.

Table 4.4 - The profit and loss report for _________ 200 g.

Indicators	According to the estimate	Actually	Deviations (+,-)
			In a month	Since the beginning of year
1. Sales proceeds (net)	1000	1200	200	300
2. Production prime cost	600	700	100	150
3. Gross profit (item 1-p. 2)	400	500	100	150
4. Expenses on sale	50	60	10	30
5. General running costs	50	160	10	20
6. Full prime cost of 1 sold production (item 2 + item 4 + item 5)	800	920	120	200
7. Profit (loss) on sales (l. 1 - item)	200	280	80	100
8. Operating income	60	70	10	20
9. Operating expenses	50	60	10	15
10. Non-operating income	40	50	10	15
11. Non-operating expenses	30	40	10	15
12. Profit (loss) of the taxation (item 7 + + item 8-p. 9 + item 10-p. 11)	220	300	80	115
13. Profit tax	52,8	72	+19,2	27,6
14. Profit (loss) on usual activity (item 12 - item 13)	16,2	228	+60,8	+87,4
15. Extraordinary income	-	10	10	20
16. Extraordinary expenses	-	50	50	70
17. Net profit (item 14 + item 15 - item 16)	67,2	188	+20,8	+37,4

Report of the center of investments.

The centers of investments are structural units of the highest level of the large decentralized organizations: affiliated and dependent societies of parent organizations, branches, etc. In the western countries to the centers of an investment carry also offices of multinational corporations.

As in relation to the centers of investments proceed from an assumption that they are the separate organizations, these are the centers make usual forms of accounting (financial) reports, including the report on profit.

At a comparative assessment of activity of the separate centers of investments parent organization absolute measures of profit often are incomparable because of distinctions in outputs and sizes of assets of the centers. Therefore now for an assessment of activity of the centers of investments in the countries with market economy use four indicators:

* profit;

* profitability of assets;

* residual profit;

* economic value added (EVA).

As a profit indicator depending on specific conditions of activity use profit indicators to the taxation, profits on usual activity or net profit.

Indicator of the profitability of assets (PA) determine by the relation of profit (П) to assets (And).

Now various approaches to a choice of numerator and a denominator of the given formula are observed.

In foreign practice as numerator most often use profit indicators to the taxation and the residual income to indirect expenses. Along with them some organizations take indicators of net profit into consideration.

As assets (a formula denominator) use the following indicators:

* the cost of assets on balance;

* the cost of assets on balance plus the depreciation sums on depreciable assets;

* operating assets;

* working capital plus non-current assets.

On balance (fixed assets, intangible assets and profitable inclusions in material values) include depreciable assets in the cost of assets in residual cost, i.e. minus the depreciation added on them.

The advantage of an indicator of balance cost of assets is that at its use coherence with reflection of assets in balance and with the profit estimated taking into account charged depreciation is provided. At the same time value of an indicator of profitability of assets can constantly increase together with increase in terms of use of shock-absorbing assets. The manager whom encourage for a high rate of profitability of assets, can have an aspiration to use of available assets, instead of to replacement their new, more effective.

On balance plus the depreciation sums on depreciable assets depreciable assets include the cost of assets in an indicator not in residual, and in initial cost. Thanks to it influence of terms of use of depreciable assets on the size of profitability of assets, and also methods of charge of depreciation is excluded. At the manager counteraction to acquisition of new assets disappears.

However indicator of initial cost of assets:

1. it won't be coordinated neither with balance, nor with the report on profit as doesn't include the sum of the added depreciation;

2. leads to the double account of the added depreciation sum on depreciable assets (when charging depreciation it was already carried on assets) that distorts the size of an indicator of profitability of assets.

These shortcomings of an indicator of initial cost of assets are more essential, than shortcomings of an indicator of their balance cost. Therefore the most part of the organizations at calculation of profitability of assets uses the balance cost of assets as a denominator.

It should be noted that at high inflation the initial or residual cost of depreciable assets doesn't reflect their real cost. In these conditions at calculation of an indicator of profitability of assets it is expedient to include depreciable assets in calculation for recovery cost.

Operating assets are the assets being in operation, i.e. minus the assets being in reconstruction and modernization, in a stock (reserve) and on preservation.

This indicator is applied in calculations of profitability of assets rather seldom and, as a rule, in that case when the decision on transfer of part of assets on reconstruction and modernization, in a stock and on preservation is accepted by parent organization.

Working capital estimate in subtraction from current assets of short-term obligations for them and addition to the received difference of non-current assets. This indicator in calculations of profitability of assets apply rather seldom.

Thus, the indicator of profitability of assets can be estimated with use of various indicators of profit and assets. For comparison purposes activity of the separate centers of investments parent organizations have to apply a uniform method of calculation of indicators of profitability in all centers. At the same time it is possible to apply any of the considered options of calculation of an indicator of profitability of assets to an assessment of activity of the separate center of an investment or at the same time some options.

For example, the indicator of profitability of sales is used widely by the trade organizations, differing rather low specific weight of non-current assets in their total cost.

Indicator of residual profit determine by subtraction from profit of minimum necessary profit on used assets. The last indicator determine by multiplication of cost of assets to rate of return by the assets, established by organization administration.

The example of calculation of indicators of residual profit and profitability of assets is given in tab. 4.5.

Table 4.5 - Assessment of activity of the centers of investments on indicators of profitability of assets and residual profit, thousand tenges

№	Indicators	Centers of investments
		А	B
1	Profit (П)	200	300
2	Cost of assets (And)	1000	1800
3	Rate of return (N), %	10	10
4	Minimum necessary profit on assets (NP) (item 2 x item 3)	100	180
5	The Residual Profit (RP) (item 1 - item 4)	100	120
6	The Profitability of Assets (PA) in % (item 1: item 2)	20	16,7

The data provided in the table on indicators of profit and profitability of assets don't allow to estimate objectively activity of the centers A and B as in the center B the profit sum (300 000 against 200 000 tenges is higher.) and in the center A - profitability (20% against 16,7%) is higher. The indicator of residual profit allows to give more an appreciation of activity of the center B.

The indicator of residual profit shows, what profit is brought by the relevant center of investments for the organization over minimum necessary profit on assets. It reflects a contribution of the relevant center to the general results of activity of the organization.

The organizations can establish different rates of return on used assets for the various centers of investments. Thus higher rates of return usually establish for kinds of activity with higher risk level.

Since 1980th in many countries with market economy the economic value added (EVA) indicator which determine by subtraction from economic profit of fiscal year of economic profit of previous year thus an indicator of economic profit is widely applied estimate in subtraction from net profit of the sum of a payment for assets.

The size of a payment for assets (capital) establish multiplication of cost of assets to their price. The price of assets is the sum of money which needs to be paid for use of a certain volume of the financial resources, expressed as a percentage to this volume.

Each source of financial resources has the price.

If, for example, the price of assets is determined at the level of 10% of their cost, the size of a payment for assets worth 1 million rubles will make 100 000 rub.

The net profit of the center is defined by subtraction from profit on usual activity of the sum of a profit tax. By the received rest add the extraordinary income and will read extraordinary expenses.

The example of calculation of EDS for 2001 and is given 2002 in tab. 4.6.

Table 4.6 - Calculation of the economic value added, million tenges

№	Indicators	year
		2010	2011	2012
1	Profit (П)	200	25	250
2	Profit tax	48	54	60
3	The Net Profit (NP) (item 1 - item 2)	152	171	190
4	Payment for assets	100	106	110
5	The Economic Profit (EP) (item 3 - item 4)	52	65	80
6	Economic Value Added (EVA) (item 5 гр. 4 - item 5 гр. 3; item 5 гр. 5 - item 5 гр. 4)		13	15

The indicator of EDS shows an increase in value of the share capital for the reporting period.

At an assessment of business units on this indicator managers are interested both in increase прибьши, and in depreciation of assets in the business unit.

It should be noted that at calculation of an indicator of EDS it is necessary to take only those assets which are really supervised by managers of business units into consideration. In this regard it isn't necessary to include business reputation and organizational expenses of intangible assets, cost of an office building of the company, financial investments of the company if control of them is exercised centrally, etc. in structure of assets of business units.

Transfer prices.

The price at which the center of responsibility transfers the production (work, services) to other centers of responsibility in the organization is called transfer or sells production (works, services) under the counter (other organization).

The transfer prices are applied in the centers of profit and the centers of investments, and sometimes - and in the centers of expenses.

If production (works, services) the centers of responsibility is consumed entirely in the organization, the transfer price is purely registration and has no impact on a financial position of the organization. In this case the transfer price serves as means of an objective assessment of activity of the centers of responsibility.

In that case when the centers of responsibility have the right to enter independently a foreign market with the production to choose buyers, to define sales volumes and the prices of the production, the transfer price becomes the important independent indicator having essential impact on a financial position of the organization.

Now use three main methods of determination of size of the transfer prices:

* on the basis of market prices;

* on the basis of expenses;

* contractual transfer prices.

In the presence of the corresponding conditions the preference is given to the first method as market prices are rather objective, give the chance to estimate activity of the centers of responsibility on the basis of financial results.

Application of market prices as transfer probably under following conditions:

* rather high extent of decentralization of management at which the centers of responsibility possess powers to sell and buy production, both in the organization, and on the party;

existence of stable market prices of production, works, services of the centers of responsibility. In practice market prices are exposed to frequent fluctuations for the various reasons, including because of establishment by various suppliers of the different prices of identical goods. The expensive transfer prices are established on a basis:

* variable expenses;

* full expenses;

* full expenses plus profit.

The decision on a choice of the corresponding expensive transfer price is usually made by the top management of the organization because of possible disagreements at the responsibility centers.

It must be kept in mind that when using as the price of variable expenses of the price don't compensate constant expenses and don't provide receiving profit. In this regard the prices on the basis of variable expenses are unacceptable for the centers of profit and the centers of investments - they can be used only in the centers of expenses.

The prices on the basis of full expenses don't provide also receiving profit therefore are applied only in the centers of expenses.

The transfer prices on the basis of full expenses plus the profit, profits providing receiving, can be used in all centers of responsibility.

At determination of the expensive transfer prices for a basis take standard (standard) costs. If to establish the prices on the basis of the actual expenses, at the center of responsibility selling production incentives of decrease in the actual expenses decrease.

At establishment of the market and expensive transfer prices between buyers and sellers often there are disagreements. In these conditions of the price it is possible to establish on the basis of negotiations between them. Besides, on the basis of negotiations it is expedient to carry out establishment of the prices on some other the reasons (for example, it is favorable to selling center of responsibility to establish prices for products below market for preservation of the business and a gain of the new market). The contractual transfer prices often use multinational corporations in an intra firm exchange with the purpose of reduction of tax and customs payments.

Negotiations on the size of the transfer prices quite often don't yield positive result, especially when the seller and the buyer are technologically connected among themselves and can't choose to itself the business partner. In these conditions it is expedient to use arbitration court for the solution of disputes on the transfer prices.

Budgeting (planning) on the responsibility centers as a basis of calculation of indicators of awarding of divisions.

The account and the analysis on the responsibility centers - is system which measures (estimates) compliance of the reached results planned on each division (the responsibility center) which is independent object of the budgetary (planned) process and is responsible for execution of the list of the budgetary indicators determined by central office of management at development of the consolidating plan (budget) of the enterprise for the forthcoming budgetary period. Thanks to the specification of delegation of powers to division, actually and defining its status as responsibility center, any deviations from planned indicators are fixed not only in an emergence place, but also on the responsible person (division). The account analysis concept on the centers of responsibility provides application to various divisions of the enterprise of various criterion functions which most effectively stimulate the given divisions in economic activity of the enterprise. Actually, the effective system of material stimulation at the enterprise becomes possible thanks to the account on the responsibility centers which allows to compare and estimate quantitatively a contribution of various divisions to change of end financial results of the enterprise (in English this function «benchmarking» which in this context can be translated as «a mark assessment») is called in a word.

Let's notice that various divisions (the responsibility centers) at the enterprise differ on the «freedom degree», that is on powers of heads of structural divisions in the operational work. So, the chief of production shop has, as a rule, the right to determine independently the size and structure of specific expenses by release of these or those types of production while the structure and size of release are established and are rigidly supervised by management personnel in the person of the economic planning management (EPM). If the shop is put on a self-supporting basis (it happens when shop functions completely cover all production cycle by this or that type of production), powers of the head significantly extend. It acquires the right in certain limits independently to establish release volumes, and not level of specific expenses, and the settlement profit defined as a difference of settlement revenue from let-out production and size of actual cost of release will be an estimated indicator of activity of shop already.

Within organizational structure existing at the enterprise all centers of responsibility can be classified by criteria of a level of authority of heads of divisions as follows:

The account and the analysis on the responsibility centers - is system which measures (estimates) compliance of the reached results planned on each division (the responsibility center) which is independent object of the budgetary (planned) process and is responsible for execution of the list of the budgetary indicators determined by central office of management at development of the consolidating plan (budget) of the enterprise for the forthcoming budgetary period. Thanks to the specification of delegation of powers to division, actually and defining its status as responsibility center, any deviations from planned indicators are fixed not only in an emergence place, but also on the responsible person (division). The account analysis concept on the centers of responsibility provides application to various divisions of the enterprise of various criterion functions which most effectively stimulate the given divisions in economic activity of the enterprise. Actually, the effective system of material stimulation at the enterprise becomes possible thanks to the account on the responsibility centers which allows to compare and estimate quantitatively a contribution of various divisions to change of end financial results of the enterprise (in English this function «benchmarking» which in this context can be translated as «a mark assessment») is called in a word.

Let's notice that various divisions (the responsibility centers) at the enterprise differ on the «freedom degree», that is on powers of heads of structural divisions in the operational work. So, the chief of production shop has, as a rule, the right to determine independently the size and structure of specific expenses by release of these or those types of production while the structure and size of release are established and are rigidly supervised by management personnel in the person of the economic planning management (EPM). If the shop is put on a self-supporting basis (it happens when shop functions completely cover all production cycle by this or that type of production), powers of the head significantly extend. It acquires the right in certain limits independently to establish release volumes, and not level of specific expenses, and the settlement profit defined as a difference of settlement revenue from let-out production and size of actual cost of release will be an estimated indicator of activity of shop already.

Within organizational structure existing at the enterprise all centers of responsibility can be classified by criteria of a level of authority of heads of divisions as follows:

a) The center of administrative expenses (managed cost center) - this division, which head within the allocated budget is responsible for providing the best level of services. This type, as a rule, most we accept for administrative departments of the enterprise (functional services) where difficult give in to measurement as expense (inputs), and results (outputs). In this case non-standard control methods and stimulations, such as «job evaluation» (work management), «the zero budget» (zero-based budgeting) and «goals management» (management by objectives) are used.

b) The center of standard costs (standard cost center) - this division in which the head is responsible for achievement of standard (planned) level of expenses on output, works, services. Standards, as a rule, cover spheres of direct labors, a factor cost of raw materials and materials and variable overhead costs. Efficiency of activity of such division, respectively, is measured by the size of positive or negative deviations of the actual level of expenses from planned (standard). As a rule, it is the most suitable scheme for production divisions (shops). The specific center of standard costs is the supply service which supervises the procuring prices within established the physical volume and structure of purchases.

c) The center of the income (revenue center) - this division, which head within the allocated budget is responsible for maximizing the income from sales. Thus, as a rule, heads of such divisions have no powers on additional (over the budget) to an expense of means for attraction of additional resources, on a variation the realization prices for the purpose of maximizing profit. The sale service is a typical example of the similar center of responsibility.

d) The center of profit (profit center) - this center of responsibility differs from previous expansion of powers of the head. Here it has the right to vary expenses and the realization prices for the purpose of maximizing profit on operations. The self-supporting production division allocated for separate balance can be an example of the such center of responsibility. However here powers of the manager don't join yet decisions in the field of capital expenditure (investments).

e) The center of investments (investment center) - here at an assessment of efficiency of activity joins in addition to the previous point percent on the involved capital. Thus, criterion function on which efficiency of activity of «the responsibility center» is estimated, here is or return on invested, or profit minus percent on the involved capital (the last is usually called or «the residual income» [residual income], or «residual profit» [residual profit]). This indicator most we accept for enterprise divisions with big degree of autonomy (for example, large subsidiary of the holding industrial company). Full independence in the sphere of investments at separate structures of the company doesn't happen practically never (it means the absolute not accountability of structure to the company management) therefore it is possible to say that the centers of investments in rather large powers have the right to define policy in the sphere of capital and long-term financial investments, that is capitalizations of the net profit.

In real practice of the enterprises divisions very often meet the status of the mixed center of responsibility which combine signs of two or several classical centers of responsibility. The division in which current activity the «delegated» powers on various activities are various is called as the «mixed» center of responsibility.

Optimization of system of material stimulation is budgeting «reverse of the medal» on the responsibility centers. Depending on type of the center of responsibility certain components of the budget are centrally fixed, and others are given «on a payoff» to managers on places. Those components of expenses which are in the sphere of powers of the central office or local division, are called as it as «controlled» (controllable costs).

Respectively:

- on the one hand, expenses «supervised» by the center are traced by it through system of monitoring of performance of budgets;

- on the other hand, it is important that the stimulation system (stimulation indicators) managers on places was such that they were interested in dynamics of «expenses supervised by them» which would be equitable to interests of improvement of financial results of the company as a whole. In a case when indicators of stimulation are inadequate to type of the center of responsibility, there is an effect of so-called «moral hazard» when managers on places are objectively interested in such functioning of the divisions which negatively affects financial results of the company as a whole. So, in the sphere of oil production in certain cases (in adverse price conditions on oil) stimulation of the oil-extracting enterprises not for decrease in cost intensity of production, and for increase in gross release can be moral hazard example.

Indicators and conditions of awarding for the various centers of responsibility as a part of the enterprise

Concept of «conditions», «indicators» and awarding «coefficients».

Let's note right at the beginning that the concepts «awarding indicators» and «awarding coefficients» aren't identical. Indicators of awarding are understood as sizes of these or those parameters of economic activity of the enterprise which are a basis (base) of calculation of bonus fund of divisions and their heads. Coefficients of awarding are meant as coefficients (excuse for a tautology), awardings applied to indicators at calculation of bonus fund. Coefficients of awarding are standard for all divisions and are equal to a share of a possible gain of net profit (in comparison with the planned level) which the management of the enterprise plans «to start up» for formation of bonus fund of divisions.

So:

awarding indicators (base of charge of bonus fund) Ч awarding coefficients (rate of charge of bonus fund) = absolute size of bonus fund of divisions

Conditions of awarding are those parameters of the economic activity which not achievement automatically deprives award division (conducts to a depremirovaniye). The choice of indicators and conditions of awarding depends on what status of the center of responsibility has division. It would be desirable to record two important points accurately:

- conditions of awarding of divisions without fail are centrally established budgetary parameters;

- awarding indicators without fail are favorable deviations from centrally established budgetary parameters.

Conditions and awarding indicators for the centers of administrative expenses.

The centers of administrative expenses at the enterprise as it was already noted, are characterized by that «output» results of their activity owing to specifics of executed functions, it is very difficult to specify quantitatively. Services of management personnel plus general economy services usually treat the status of the centers of administrative expenses. Awarding indicators for the centers of administrative expenses usually are (in a complex):

a) favorable deviations (decrease in comparison with the plan) estimates of operating expenses;

b) implementation of the target (qualitative) budgetary plan;

c) the representative indicators characterizing the general level of labor and performing discipline and quality of work.

Conditions of awarding of the centers of administrative expenses are:

a) not excess of the estimate of operating expenses;

b) besides implementation of the target (qualitative) budgetary plan.

Let's consider each of indicators and awarding conditions separately.

Estimate of operating expenses.

The estimate of operating expenses is understood as those internal expenses of activity of the center of administrative expenses which are supervised by his head. Most often it is compensation fund (sometimes the head has powers independently to gather on a limit of the staff list of workers, proceeding from «forks» of a scale of charges, sometimes these powers extend before independent definition of official salaries). Less often here overhead costs if they are transferred under responsibility of unit managers (the estimate of office, expense, travel expenses and so forth) join. Absolutely seldom situations (generally at the large enterprises) when heads of large functional services within the budget sums allocated with it receive powers on hiring of the third-party organizations for ensuring performance of a target budgetary task (for example, on hiring of consulting, engineering, auditor and other firms) meet. In any case, all categories of expenses transferred in a framework of the budgetary period unde...