chapter 12 - Segment Reporting and Decentralization Chapter...

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Chapter 12 Page 1 Accounting 2102 Segment Reporting and Decentralization Chapter Twelve
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Chapter 12 Page 2 Accounting 2102 Responsibility Accounting . . . Centralized and Decentralized Operations    Who makes planning and operational decisions? Centralized Operations Top management (top down budgeting) Decentralized Operations Varying levels of mangers and workers (part bud.) What would necessitate decentralized operations? Geographic diversity, product diversity, customer diversity What are the advantages/disadvantages? Frees up top mgmt People in the know make decisions Inc motivation Issue w/ goal congruence
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Chapter 12 Page 3 Accounting 2102 Responsibility Centers . . . accountability responsible for . . . performance evaluation tools . . . example . . . Cost Center cost BVA (performance report) HR Acct Mktng legal Revenue Center revenue Same as above Travel agent, ins agent Profit Center Revenue, cost Same Sales dept for the summit agency, dealership Investment Center Rev, cost, assets Same, return on investment, residual income Summit agency, GM
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Chapter 12 Page 4 Accounting 2102 segment . . . any part or activity of an organization about which a manager seeks cost, revenue, or profit data characteristics of segmented reporting (performance report) contribution income format traceable fixed costs should be separated from common fixed costs to enable the calculation of a segment margin Decentralization and Segment Reporting the traceable fixed costs of one segment may be a common fixed cost of another segment
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