Managerial Accounting Chapter 10

Managerial Accounting Chapter 10 - Managerial Accounting...

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Managerial Accounting Chapter 10 – Decentralization Decentralization in Organizations Decentralized Organization – decision making authority is spread throughout the organization rather than being confined to a few top executives o Advantages: Top management can concentrate on larger issues Lower level managers tend to have the most up to date info about day to day operations Organizations can respond more quickly to changes in operating environment o Disadvantages Lower level managers may make decisions without fully understanding the big picture May be a lack in coordination between different lower level managers Lower level managers may have objectives that clash with those of the organization o Cost Center – manager has control over costs but not over revenue or the use of investment funds Depts. Such as accounting, finance, legal, personnel, etc. o Profit Center – control over both costs and revenue, but no control over use of investment funds (usually evaluated comparing actual profit to budgeted profit)
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This note was uploaded on 02/28/2010 for the course AEM 3230 taught by Professor Little,j.e. during the Spring '08 term at Cornell University (Engineering School).

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Managerial Accounting Chapter 10 - Managerial Accounting...

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