AAM3692_Unit_6___Responsibility_accounting.pptx - Responsibility Accounting P Swartz UNAM Responsibility centres Divisionalisation Decentralisation Goal

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Responsibility Accounting P Swartz UNAM
Responsibility centres Divisionalisation Decentralisation Goal congruence Responsibility accounting Return on Investment (ROI) ROI and Decision Making Residual Income (RI)
Terminologies Term Definition Decentralisation Division of a large enterprise into more controllable units Responsibility centre Defined unit or units of an enterprise for which the manager is responsible for the activities, costs and possibly also the profit and investments Cost centre Represents a section or segments of a section for which managers are responsible for the costs that originate there Profit centre Managers are held responsible for the control of costs and income. Inter departmental sales prices are known as transfer prices Investment centres Manager responsible to control income, costs and investments
Divisionalisation Organisation structure may be functional divisionalised (with functional within) mixed (with central services) Divisionalisation tends to lead to decentralisation But extent of decentralisation varies

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