Republic of the Philippines

BATANGAS STATE UNIVERSITY

Pablo Borbon Campus
Rizal Avenue, Batangas City

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS

AND INTERNATIONAL HOSPITALITY MANAGEMENT
Accountancy and Management Accounting Department

Homework No. 1 – Operations Auditing

2nd Semester, A.Y. 2022-2023
Prepared By: Phillip R. Malabanan, CPA, MBA, CISA

Name: Mary Rose R. Enriquez Section: BSA-3204

Student No.: 20-58316 Schedule: Sunday, 10:00-11:00 AM

1.) Using the illustration below, explain effectiveness, efficiency, and economy. Cite one example for
each. (20 points).

Every businesses have their plans to achieve their goals and objectives. The illustration above
shows the process on how a business attain their goals and objectives. First is to have a planned
inputs then transform it to actual inputs. Economy is the ratio between the two that determines
how well inputs are being acquired in terms of quantity, quality, and price. For example, Tailor
Shop wants to maximize their profit at the same time minimize their cost so they plan and
purchase the necessary materials and equipment like fabrics, thread, sewing machine, etc. having
the units cost kept under control in order to receive inputs at the lowest possible cost for a
specified level of output at a defined quality. Second, convert the actual inputs to actual outputs.
The fabrics turns to garments and the efficiency is in between the actual input and actual output
wherein it assess how efficiently and smoothly the process is in making the output without
mistakes or avoiding waste and rework that can decrease the output. Lastly, actual outputs to
planned outputs in which it is the objective of a business. Effectiveness is the ratio between the
two that measures how successful the plan is to achieve the desire outputs. Furthermore, to
prove that the Tailor Shop attain their objective and the plan is effective, the outputs are
purchased or sold by the customers and wanting to buy more.

Generally, businesses can attain their goals and objectives through the use of 3 E’s- Economy,
Efficiency and Effectiveness.

2.) Identify different performance measures and give at least three example each. (30 points).