Factors Determining Allocation of Common Costs in the Financial Services Sector: A Study of Rural Banks in the Ashanti Region of Ghana

One of the necessary conditions for organisational controls to work is that the manager whose
performance is being measured must be able to affect the results in a material way. The
controllability principle in management accounting is one of the central tenets of responsibility
accounting, (Merchant and Van der Stede, 2007).
The study assessed whether in measuring the performance of these branches factors that are
within the control of these branches are considered. In addition the study examined the
impact of contingent factors on the application of the controllability principle.
The study found out that branch managers do not have full autonomy and control over
common resources costs which form part of their evaluation, even though management
accounting theory suggest that.
The study findings also revealed that profitability (i.e. operating profit margin, Return on
shareholders' capital) and liquidity (i.e. current ratio and working capital ratio) have varied
impact on the use of performance measures, and the allocation of common costs to branches in
the rural banks in the Ashanti Region of Ghana.