Definition: The responsibility accounting performance report is a budget that compares actual and budgeted amounts of controllable costs for a department and its manager. The responsibility accounting performance report collects all of the responsibility accounting budgets made for each department and summaries them in one large report.
What Does Responsibility Accounting Performance Report Mean?
Basically, the RAPR is a summary report of all the responsibility accounting budgets made for individual managers. Executive and upper level management use the RAPR to track the efficiency and profitability by department and manager. The RAPR is also used to help explain changes in cost structure and profitability from the budgeted expectations earlier in the year.
For instance, if the manufacturing department just invested in new robotic assembly line equipment, the RAPR should show a decrease in the variable costs per product produced. Likewise, over labor hours and labor costs should be lower for this department as well. The budgeted reports would show a low expected level of these variable costs. Upper management could then check the variances between the actual and budgeted costs.
Basically, the entire responsibility accounting performance report is designed to hold department managers accountable for the costs that they can control and are responsible for. If upper level management sees a manager’s efficiency and profitability decrease compared with the budgeted numbers, management can talk with the department manager and try to correct the unfavorable variances .