Types of Revenue Center Responsibility Reports

Under normal conditions, sales revenue is proportional to the number of products and goods sold, meaning that when the number of products and goods sold increases (decreases), total revenue will increase (decrease);

When the structure of goods sold changes, increasing (decreasing) products and goods with high (low) selling prices will cause total revenue to increase (decrease) and vice versa;

When the average selling price of products and goods increases (decreases), total revenue will increase (decrease) and vice versa.

Revenue difference = Actual revenue – Estimated revenue

To evaluate non-financial indicators at the revenue center, it is necessary to compare the performance indicators with the budgeted indicators. For example, evaluating indicators reflecting the growth rate of sales contracts. This case needs to be considered from two perspectives: the number of contracts and the value of the contracts. If this ratio increases in both the quantity and value aspects, it is a good sign, otherwise, or only completed in one aspect, it needs to be considered specifically for an accurate assessment.

1.3.2.2. Types of Revenue Center Responsibility Reports

The revenue center's responsibility report reflects actual revenue compared to the budget and the level of influence of factors on the implementation of revenue budget according to certain management criteria. If revenue management is required by product group, it is necessary to determine the influencing factors such as the quantity of goods sold by each product group, the average selling price and the structure of goods sold. If revenue management is required by business location, it is necessary to determine the corresponding factors for each location... Thus, at the revenue centers, there will be the following reports:

- Revenue report by product group;

- Revenue report by business location;

………….

Based on the revenue center report, the administrator grasps the revenue performance according to business management requirements.

Table 1.3. Revenue responsibility report by product group/shipment

(Financial indicators)

Month……..

Target

(Source: Author's synthesis from research)

Revenue report by product group/shipment

(Non-financial indicators)

Month……..

Target

(Source: Author's synthesis from research)

This report is prepared based on the estimated and actual sales revenue for each product group. Depending on management requirements, the sales report can be prepared weekly, monthly, quarterly, or yearly.

1.3.3. Profit center measurement and reporting

1.3.3.1. Profit Center Measurement Indicators

To evaluate the indicators at the profit center, it is necessary to compare the actual indicators with the budgeted indicators to determine the difference and find the causes affecting the profit budget implementation.

LNT – LND =  LN =  L +  K +  t

In which: LNT is realized profit; LND is estimated profit;

 LN is the difference between realized profit and estimated profit. Factors affecting profit realization include:

- Factor of quantity of goods sold (  L)

 L = ( L T - L D ) x K T t T

-Structure of goods sold (  K)

 K = (K T - K D ) x L T t T

-Profit rate of each batch of goods sold (  t ).

 t = ( t T – t D ) x LTKT

Under normal conditions, when the quantity of products and goods sold increases (decreases), total profit will increase (decrease);

When the structure of goods sold changes, there will be two directions: (1). If the business sells many product groups, goods with high profit margins will increase profits and (2) If the business sells many product groups with low profit margins, total profits will decrease;

When the average profit margin of products and goods increases (decreases), the total profit earned will increase (decrease) and vice versa.

To evaluate non-financial indicators in a profit center, it is necessary to compare the actual indicators with the budgeted indicators. For example, evaluate the indicator reflecting the rate of improvement of product designs. If this indicator is higher than the budget, it means that

Enterprises have made many efforts to improve the design of export goods to suit consumer tastes in each market, which will increase profits. This needs to be promoted... On the contrary, it is necessary to find the cause to propose timely solutions. This needs to be promoted...

1.3.3.2. Types of Profit Center Responsibility Reports

The TTCP's responsibility report reflects the implementation of profit estimates and determines the level of influence of factors on the implementation of profit estimates. Depending on management requirements, the profit report at TTLN may include:

- Profit report by product group/shipment;

- Profit report by business location; etc.

Table 1.4. Profit report by product group/ batch

(Financial indicators)

Month……..

Unit:…..

Target

Profit report by product group/ batch

(Non-financial indicators)

Month……..

Unit:…..

Target

(Source: Author's synthesis from research)

This report is prepared based on the estimated and actual profit figures for each product group/shipment. Depending on management requirements, profit reports can be prepared weekly, monthly, quarterly, or yearly.

1.3.4. Investment center measurement and reporting

1.3.4.1. Measurement indicators of the Investment Center

At the end of the business period or any time the administrator needs data to serve decision making, the professional department needs to calculate and evaluate the indicators by comparing the performance indicators with the estimates to consider the differences and the impact of each factor. For example:

ROI T – ROI D =  ROI =  L +  K +  t

In which: ROI T is the actual return on investment; ROI D is the estimated return on investment;

 ROI is the difference between the actual investment rate and the budget.

Factors affecting the implementation of the investment return rate estimate include:

- Average profit factor of each type of product, goods (  Lb )

 Lb = ( Lb T - Lb D ) x K T Vb T

-Structure of goods sold (  K )

 K = (K T - K D ) x Lb T Vb T

-Total average capital used (  Vb ).

 Vb = (Vb T – Vb D ) x LbTKT

When the profit of each type of product or goods sold increases (decreases), it will affect the return on investment rate, causing the return on investment rate to increase (decrease) in the same direction.

When the structure of each type of product or goods sold changes, it will affect the return on investment rate. Specifically, when increasing (decreasing) the types of products or goods with high (low) profit margins, the return on investment rate will increase (decrease) in the same direction. If during the period, the enterprise increases the sale of products or goods with high profit margins on the basis of cost savings, the return on investment rate will increase.

When the average total capital used for each type of product or commodity increases (decreases), it will affect the return on investment rate, causing the return on investment rate to decrease (increase) in the opposite direction. If the same amount of capital brings higher profits, leading to an increase in the return on investment rate, it means that the business's use of capital is highly effective.

To evaluate non-financial indicators at the investment center, it is necessary to compare the performance indicators with the budgeted indicators of these indicators. For example, when considering the level of investor satisfaction with the profitability of the investment center or the whole enterprise, whether it is good or not, it is necessary to compare the satisfaction rate of investors in the implementation period with this rate in the budgeted period. If this rate ≥ 0, it means that the level of investor satisfaction with the profitability is better and needs to be promoted, and vice versa, if this rate ≤ 0, it means that the level of investor satisfaction is not as expected by the enterprise. This can be considered whether the budgeting process is correct and accurate or whether there are any shortcomings in the implementation process to promptly correct them.

1.3.4.2. Types of investment center responsibility reports.

The Center's Responsibility Report reflects the actual situation compared to the estimates of financial and non-financial indicators of this center. Thereby, the administrator understands the level of influence and the reasons for completing or not completing the proposed indicators. This is the most important report for senior managers in the enterprise. Based on this report, the administrator has a reward system appropriate to the results of departments or individuals in the enterprise.

Table 1.5. Investment center responsibility report

(Financial indicators)

Month……..

Target

Investment Center Responsibility Report

(Non-financial indicators)

Target

(Source: Author's synthesis from research)

This report is prepared based on the estimated and actual figures according to the above indicators. Depending on the management requirements, the investment center's report can be prepared monthly, quarterly or annually.