Respond to 2 classmates’s discussions- Evaluating Performance

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1. Emily
As our book states, the evaluation methods for various organizations will depend upon whether we are dealing with a nonprofit, or a for profit business. (Schneider, 2017, pp. 11.4) The for profit companies will use evaluation methods such as ROI, EVA, or ROR. However, those types of evaluation methods may not be appropriate for nonprofits which don’t always use a traditional method for evaluation.
Within a single company, there may be several accounting methods used between various departments. These methods might include FIFO (first in first out) for their inventory or LIFO (last in first out). The differences between these two methods can cause issues in accounting. Schneider, 2017 states “The same depreciation method should apply to similar classes or categories of assets.” (pp. 11.3)
Managers should be motivated to find goal congruency between the accounting methods in order to improve the overall ROI of the company. The problems that may arise due to differences in the evaluation methods include the inability to compare expenses such as tools, which is the example our book gives us. Ultimately, managers must be able to settle on the same criteria they want to use to measure company performance.
Schneider, A. (2017). Managerial Accounting: Decision making for the service and manufacturing sectors (2nd ed.) [Electronic version]. Retrieved from https://
2. Tinel.
There are multiple problems that can and will arise when evaluating various divisions of accounting. As we have learned in the previous weeks the account method one chooses to utilize will vary with reason and preference, and therefore cause a companys overall analysis to not be as accurate. It is important to carefully consider the account method and determine the right method for the correct most accurate product measurement.

A company choosing to use the first-in first out or FIFO method in one department while the other department is using the last-in last out method (LIFO) in the another. Choosing to analyze these department would show a huge division in profits with the LIFO seeming to be a better deal. The use of Residual Income within a division could present another possible problem. This accounting method is utilized when one is trying to focus on a dollar amount vs a ration (Schneider, 2017). A manager is going to look at the trying to raise the overall dollar amount however, if during this process a comparison arises that includes dollar amounts on different ends of the spectrum (one $50 million and one $2 million) the smaller value is likely t be over looked at the larger one “should” yield a higher return.


Schneider, A. (2017). Managerial Accounting: Decision making for the service and manufacturing sectors (2nd ed.) [Electronic version]. Retrieved from


Evaluating Performance
When comparing various divisions within a company, describe what problems can arise from evaluating divisions that have different accounting methods, as described in Chapter 11 of your text. Cite three examples of accounting methods that could cause divisions’ profits to differ. Your initial post should be 200-250 words.

Guided Response: Review several of your classmates’ postings. Respond to at least two of your classmates and provide recommendations that extend their thinking and may inspire reconsideration of their examples.


Required Resource
Schneider, A. (2017). Managerial Accounting: Decision making for the service and manufacturing sectors (2nd ed.) [Electronic version]. Retrieved from
• Chapter 11: Analysis of Decentralized Operations
• Chapter 12: Costs of Quality and Other Cost Management Issues

Recommended Resource
Lombardo, J. (2018, February 11). The rational decision making model: Steps and purpose in organizations (Links to an external site.) [Video file]. Retrieved from
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