Standards for evaluating the performance of outlet managers in companies with numerous outlets are difficult to formulate because. of the differences in the profit potentials of the various outlets. Differences in measured contribution margins among outlets may be explained by differences in the characteristics of the locations and facilities of the outlets as well as the differences in the performance of the outlet managers. Since the location and facilities of an outlet are not controllable by the outlet manager, the effects of these environmental factors should be extracted before evaluating the performance of the manager. For a small number of outlets, central marketing officials can be familiar with the potentials of the outlets and can subjectively adjust for the potential differences. However, for a larger number of outlets, subjective adjustments for potential differences are not feasible. The performance measurement and evaluation system proposed here extends responsibility accounting to make objective intraperiod performance standards valid and operational. The extended system incorporates statistical techniques to provide a means for estimating the effects upon an outlet's measured performance' of the nonmanagerial environmental factors associated with an outlet. Since these environmental factors are not controllable by the outlet manager, they can be eliminated and the manager held responsible only for the effects of those factors controllable by him.

Managers are usually responsible for the control of the level of several process variables, such as cost, quality, rate of output, and so on. The levels of these process variables are known as the states of the system, and they may be represented by the values either of a continuous variable or by a discrete variable. It is assumed that these states can be ordered in terms of their desirability. Some processes may move only from a more desirable to a less desirable state while others may shift in either direction. These shifts may occur with or without the intervention of the manager. The control system is a plan formulated by management to indicate when intervention should take place. Three types of control systems are generally possible. The first involves no intervention by the manager until a breakdown of the process occurs. This approach is to be favored when the continued operation of the control system is less costly than the benefits to be derived from intervention. The second type of control system consists of periodic intervention by the manager for purposes of adjusting or otherwise influencing the process. The most compelling reason for this approach lies in its ease of application. The third approach bases the intervention decision on information obtained from the process. This information is typically obtained by sampling. The present paper will concentrate on this third type of control system. Several components are incorporated into any control system. First, the manager must establish the variable or variables to be controlled. He must

Performance Measurement, Direct costs, Absorption costing, Ex post optimum model

Accelerated Depreciation, Internal revenue code, Double declining balance depreciation, Sum of years depreciation

Earnings smoothing, Changes in accounting methods, Earnings management

M&A accounting, Earnings management, Pooling of interest method, Purchase pooling

Information system design alternatives have long puzzled and frustrated those interested in improving information system design. Design alternatives exist in all phases of the information system including measurement, collection, storage, processing, communication and display.' This study concentrates on a simplification of the general design problem of comparing one specified information system, an information structure, with an alternative. Review of the literature indicates that research methodology for this question is incomplete, particularly with respect to empirical verification of hypotheses, with respect to the development of empirical measures of the usefulness of changes in the information system, and with respect to inclusion of the real decision maker into the analysis. Thus, a main purpose of this study is to develop and implement empirical means of measuring and comparing the effects of changing the design of an information system. An experiment is designed for this purpose. The experiment is a business game that requires the businessmen and student participants to reach decisions concerning production quantities, advertising purchases, and input mix. The independent (controlled) variable in the experiment is a difference in time delay before information is communicated.

Robert H. Strawser, John M. Ivancevich, Herbert L. Lyon, A Note on the Job Satisfaction of Accountants in Large and Small CPA Firms, Journal of Accounting Research, Vol. 7, No. 2 (Autumn, 1969), pp. 339-345

The Institute's Accounting Principles Board has just added a third Opinion to its output for this year. The first Opinion dealt with reporting net income of commercial banks, the second with accounting for convertible debt and debt issued with stock purchase warrants, and the third with computing earnings per share. Although there were some delays in getting each of these Opinions out, as compared to original time schedules, the fact that they were finalized is cause for satisfaction, because each of the opinions faced strong opposition from various groups. This is not new or surprising, for every subject tackled by the Board is controversial and strong opposition may be expected from some quarter for any position taken. While some financiers and business conglomerators complain about what the Board is doing, many observers are commenting favorably about its work. One syndicated columnist recently wrote an article about the APB entitled, They Act as Management's Conscience. In it he said

Although accounting has traditionally assumed a relationship between a firm's historical transaction data and its future performances, there is increasing interest in assessing this relationship directly in terms of specific predictions of the firm's future earnings. The most recent statement of accounting theory published by the American Accounting Association emphasizes the importance of this aspect of accounting in the following remarks: