Total performance measurement case application: Phillips Petroleum Company

Abstract

Scope and Method of Study: The study relates profitability of an organization with the productivity and pricing over or under recovery on resources. The theory was based on cost accounting price -volume - cost concepts and upon research done by the American Productivity Center and Phillips Petroleum Company. Data from accounting and manufacturing statements in plants owned by Phillips Petroleum Company was gathered and used to test the applicability of the proposed performance measurement methods.

Findings and Conclusions: The results of the study showed that profitability in a firm is directly related to productivity and pricing over or under recovery. All the data necessary to perform a total performance analysis was as shown to be readily accessible in the accounting information system. When the total performance analysis was performed using representative data from the accounting information system at Phillips Petroleum, the results were tied back to the income of the business unit analyzed. Establishing a relationship between the income of the business unit and the productivity and pricing over or under recovery allowed the manager of the unit to more fully understand his operation.