AAM3692_Unit_6___Responsibility_accounting.pptx -...

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Responsibility AccountingP Swartz UNAM
Responsibility centresDivisionalisationDecentralisationGoal congruenceResponsibility accountingReturn on Investment (ROI)ROI and Decision MakingResidual Income (RI)
TerminologiesTermDefinitionDecentralisationDivision of a large enterprise into morecontrollable unitsResponsibility centreDefined unit or units of an enterprise for whichthe manager is responsible for the activities,costs and possibly also the profit andinvestmentsCost centreRepresents a section or segments of a sectionfor which managers are responsible for thecosts that originate thereProfit centreManagers are held responsible for the controlof costs and income. Inter departmental salesprices are known as transfer pricesInvestment centresManager responsible to control income, costsand investments
DivisionalisationOrganisation structure may befunctionaldivisionalised (with functional within)mixed (with central services)Divisionalisation tends to lead todecentralisationBut extent of decentralisation varies

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