Under responsibility accounting concept organizations are segmented as cost centers, profit centers, and investment centers. The main purpose of this segmentation is to measure the performance of center managers. Different and various tecniques and approaches are used to measure the performance of center managers. In this articile an approach called "Contribution Margin Approach" is analysed and explained. The conceptual explaination is supported by an example which is developed by the author. Two different situations, substitute and non subsititute goods, ara analysed and the determination of various variances are dicussed. In the explaination the numerical values of the developed example have been used.The purpose of the article is to give conceptual explanaition to the various level managers,to inform them about the one appoach that is used to measure their performances. Another purpose is that to make the managers, who measures the performance of their subordinates, aware of such approach.
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