ACIS_2116_Chap12_Slides_with_blanks-1

ACIS_2116_Chap12_Slides_with_blanks-1 - Segment Reporting...

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Segment Reporting and Decentralization Chapter Twelve
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A Decentralized Organization Decision making is spread throughout the organization. __________ accounting functions best. Lower-Level managers can make decisions and are held accountable for the outcomes of those decisions.
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Benefits of Decentralization Top management - can focus on higher- level planning Lower-level managers: Gain experience in decision-making Increased job satisfaction. May have better information Can respond quickly to customers
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Disadvantages of Decentralization Lower-level managers: May not see “big picture” Objectives may not be those of organization Lack of coordination and communication Difficult to spread innovative ideas
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Cost, Profit, and Investments Centers Responsibility Center Cost Center Profit Center Investment Center
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Cost Center Manager has control over costs, but not over revenues or investment funds. Examples: Manufacturing facilities. Service departments (accounting, general administration, legal, and personnel.) Cost center manager evaluated based on how well costs are controlled.
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Profit Center Manager has control over both costs and revenues, but no control over investment funds. Revenues Sales Interest Other Costs Mfg. costs Commissions Salaries Other Example: Company cafeteria Profit center manager evaluated based on whether target profit is met.
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Investment Center Manager has control over costs, revenues, and investments in operating assets. Corporate Headquarters Investment center manager evaluated using Return on Investment.
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Responsibility Centers Cost Centers Investment Centers Clothing Product Manager Bottling Plant Manager Warehouse Manager Distribution Manager Sauces Product Manager Party Items Product Manager Operations Vice President Finance Chief Financial Officer Legal General Counsel Personnel Vice President Hokie Corporation Corporate Headquarters President and CEO
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Responsibility Centers Profit Centers Clothing Product Manager Bottling Plant Manager Warehouse Manager Distribution Manager Sauces Product Manager Party Items Product Manager Operations Vice President Finance Chief FInancial Officer Legal General Counsel Personnel Vice President Hokie Corporation Corporate Headquarters President and CEO
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Cost Centers Clothing Product Manager Bottling Plant Manager Warehouse Manager Distribution Manager Sauces Product Manager Party Items Product Manager Operations Vice President Finance Chief FInancial Officer Legal General Counsel Personnel Vice President Hokie Corporation Corporate Headquarters President and CEO Responsibility Centers
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A segment segment is any part or activity of an organization about which a manager seeks cost, revenue, or profit data. Quick Mart
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ACIS_2116_Chap12_Slides_with_blanks-1 - Segment Reporting...

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