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Performance Evaluation Process

Performance Evaluation Process

  1. Describe the Performance Evaluation Process Using Variances from Standard Costs along with the advantages and disadvantages for the process. Research the internet to support your discussion.

Organization objects to expand returns from its diversified functions. Therefore the said objective can be availed by means of ample scheduling and monitoring of defined plans and objectives to confirm the proper compliance of the plans. Usually organizations prefer to evaluate the performances of different functions by means of using variance analysis. Under this method, management compare the figures of actual results, chief budgets and other budgets for the purpose of evaluating the performances. In this evaluation process, management tries to differentiate between the extent to which a target or objective is encountered and the level to which the organization utilizes suitable quantity of contributions to avail a particular level of returns (Warren, C., Reeve, J., & Duchac, J, 2016). The advantages if performance evaluation process in terms of variance analysis include;

  1. It enables cost regulator and performance appraisal by means of comparing actual figures to the budgeted ones.
  2. It certifies that managers and administrators are concentrated and therefore reassure result emphasis.

Moreover, the disadvantages of this evaluation process include;

  1. It boosts thoughtlessness on the edge of managers as the managers tend to disregard other key instruments that might benefit the organization.

 

  1. It dissuades improvements as employees may not desire to fetch innovations particularly if the said innovations may bring in unfavorable variance primarily.

 

  1. Describe of Capital Investment Process methods which do not use present values. What are the positive and negatives of this method? Research the internet to support your discussion.

The capital investment process that eliminates the use of present values is the payback period. In this method the organizations make comparison of the cash flows i.e. the outflows and the period of recovery of the said outflow.

The advantages include the following;

  1. Prompt decisions are taken as less amount of time is required.
  2. Cost effective as it does not involve the services of experts.

The disadvantages include the following;

  1. Present value factor of money is ignored which does not reveal he real picture.
  2. The estimation of inflows may also be effected by the other factors i.e. inflation & taxes etc.
  3. Describe of Capital Investment Process methods which use present values. What are the positive and negatives of this method? Research the internet to support your discussion.

There exist another methods of Capital Investment Process called Net Present Value method under which the net present values of the inflows and outflows are compared and the project is accepted in case of positive net cash flows.

The advantages of this method include;

  1. These methods make use of the overall factors associated with the cash flows.
  2. Results of these methods reveal the ultimate outcome of the project.

The disadvantages include the following;

  1. Delay in decision making as a particular amount of time is required for computation and factors assessment.
  2. This method involves sound costs as services of experts are required here.

References

Warren, C., Reeve, J., & Duchac, J. (2016). Accounting 26e. ISBN: 9781305757325

 

 

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