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Management Control Systems by Mind Map: Management Control Systems
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Management Control Systems

Revision control, also known as version control and source control, is the management of changes to documents, computer programs, large web sites, and other collections of information. Changes are usually identified by a number or letter code, termed the "revision number", "revision level", or simply "revision". For example, an initial set of files is "revision 1". When the first change is made, the resulting set is "revision 2", and so on. Each revision is associated with a timestamp and the person making the change. Revisions can be compared, restored, and with some types of files, merged. The need for a logical way to organize and control revisions has existed for almost as long as writing has existed, but revision control became much more important, and complicated, when the era of computing began. The numbering of book editions and of specification revisions are examples that date back to the print-only era. Today, the most capable revision control systems are those used in software development, where a team of people may change the same files. Version control systems most commonly run as stand-alone applications, but revision control is also embedded in various types of software such as word processors and spreadsheets, e.g., Google Docs and Sheets and in various content management systems, e.g., Wikipedia's Page history. Revision control allows for the ability to revert a document to a previous revision, which is critical for allowing editors to track each other's edits, correct mistakes, and defend against vandalism and spam.

Financial Statements

Income Statement

Shows the economic flows of the company during a specific timeframe, listing its revenues and expenses. Revenues and costs are registered according to the accrual principle. Sale of goods: - transfer of property- no longer involved with goods as if owining them- revenues can be measured- benefits will arrive to seller- costs of sale can be measured Services:Revenue should be recognized according to stage of completion, other conditions equal except transfer of property IS can be listed by nature or function

Cash Flow Statement

For a specific time frame shows all the cash movements that occurred

Changes in Equity

Details the changes in the structure of equity


Further explains the information in the other financial statements. Must provide Business Segment and Geographical details. When said business segments or geographies have significantly different risks and returns from the others Basis of preparation of statements and accounting principles used

ABC Costing

ABC, is more detailed and time consuming than traditional costing, but is more precise. Instead of assigning indirect costs through just one arbitrary measure it looks into all of the activities that create costs and assigns for each activity the cost to each product according to the use of the activity.

Cost Hierarchy

The different kinds of costs drivers that could be associated with a product. Traditional cost methods only use Unit level. Unit levelBatch levelProduct sustainingPlant sustaining


Identify Activities: Assign costs to activitiesAssign activites to products

Transfer pricing

Prices that business units charge one another. Used to


Corporate and Business units

Corporate------- Business units-------Revenue center, cost center, expense center


Balance Sheet

Shows the state of the company at a given moment in time. Showing its resources and its obligations


Company resources that


Present obligations to other parties


Obligations to shareholders

Cost Center

Responsible for use of resources Not responsible for output Cost=Q*VC+FC A ficticios "Flexible budget" is created to divide the different causes of variance. Problems with methodology:Cost centers cannot control all variablesShort termNot quality or feasibility (non fin)

Total Cost Variance

Total variance= Actual-Budget

Financial accounting

Is the branch of accounting intended for users outside the organization


Consolitated FS

Show the aggregated data of various companies Objectives:Provide information on structure and profitability of a group of companies



Non Financial

They are not involved with economic quantities and are useful for their Timeliness Long Term orientation It is not so good when it comes toMeasurability


General concepts

Goals of MCS



Origin / Traditional / Declination


Weighted average cost of capitalMeasures what it costs to the company to obtain its assets considering a company obtains resources from Equity and Liabilities and both of them have different costs. WACC= (D/(D+E)*r +(E/(D+E) *rrre

Financial Statement Analysis

We need to analyse them in order to get valuable information for stakeholders on 4 fronts. Trend analysis: Across timeCross sectional analysis: With other companies. Indicators can be ratios or absolute


To see how a company can face its short term obligations

Financial structure

We use these to see -The asset composition and degree of - Dependence from third parties


Indicate the returns of resources invested in the company and within the company


Show how different resources have grown in the past

Cost accounting

Cost accounting can be focused on financial accounting (for external accountability, focused on current data, for the whole company) or management accounting (internal and forecast oriented, for some focused parts of the organization).



Cost object

Any activity for which a separate cost measure is desired - Products and services- Organizational units

Cost allocation

Different methods for allocating costs Steps:Defining the resources to allocateGrouping themChoose allocation basisCalculate the overhead ratesAssign to cost object

Cost Acumulation

Is the correct registration of different costs

Cost Accounting System

Investment appraisal

An evaluation of the attractiveness of an investment proposal, using methods such as average rate of return, internal rate of return (IRR), net present value (NPV), or payback period. Investment appraisal is an integral part of capital budgeting (see capital budget), and is applicable to areas even where the returns may not be easily quantifiable such as personnel, marketing, and training. Read more:



Profitability IndexRatio between present value of Cash flows and Investments SUM CF / SUM Investments


Internal rate of return Real rate of the investment, it is the rate at which the NPV=0 Acceptance if > than K It assumes that the interinm flows are reinvested at the same rate. And sometimes that is not possible. If the flows change signs there could be more than one IRR in that case we use the Modified IRR which discounts all investments with another rate and then we find the MIRR It should not be used to compare mutually exclusive projects since a project may have a higher IRR but lower NPV so it is more profitable but gives less value to the company.

Discounted Payback Time

Measures the amount of time for the CF to recover the investment. Payback= SUM(0 to T): NCF/(1+k) we have to find T


NCF = OpCF - Inv Fixed assets - Delta(OWC) K can be calculated including Liabilities or just investors, in the latter case then flows to/from banks affect NCF

NPV and TV

Net Present Value is the sum of the discounted cash flows generated by an innovation in different years

Calculating NPV


Corporate cost allocation

Costs that corporate level charges the BU for services

Variance Analysis

Setting targetsEvaluating Performance


Master Budget plan

It consists of operating, capital expenditure and financial budgets which are then used to project the financial statements. Major variables are- Horizon- Contents

Project and Product Life Cycle performance

Their performances are measured with 3 methods

Life cycle costing

Aims at identifying all the costs of the product during its whole life cycle. DISADV:Completeness: Only costMeasurability is difficultTimeliness: actual cost at the end ADV: ResponsibilitiesLong term orientation

Target costing

Japanese invention, looks at the problem turning it upside down and starts from the price up to the requirements. Pro: Timeliness: it can be used during all phasesCompleteness: Also uses market prices Con: Doesnt take time into consideration

Return map

It was developed by HP Takes into accountCostTimeQuality Pro: Completeness, Long term