decentralizationACC2002009

decentralizationACC2002009 - Chapter Objectives...

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Chapter Objectives -- Decentralization u Evaluate the benefits and drawbacks of decentralization u Explain the importance of decentralization in a responsibility accounting system u Differentiate between cost centers, revenue centers, profit centers and investment centers and explain how performance could be measured in each u Compute ROI for an investment center u Break down ROI into its components of margin and turnover
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Management Decision Cycle FINANCING DECISIONS INVESTING DECISIONS OPERATING DECISIONS FUNDING OPERATING PROFIT INVESTMENTS
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Organizational Structures u Centralized Organization à A few individuals at the top of an organization retain decision-making authority. u Decentralized Organization à Managers at various levels throughout the organization make key decisions about operations relating to their specific area of responsibility
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Advantages of Decentralization u Those closest to the problem are more familiar with the problem u Key in improving customer service u Higher job satisfaction of managers u Managers receive on-the-job training, making them better managers
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decentralizationACC2002009 - Chapter Objectives...

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