Chapter 11 - Chapter 11 Segment Reporting and...

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Unformatted text preview: Chapter 11 Segment Reporting and Decentralization Suggested Homework: E11-1 thru E11-10 Decentralization in Organizations Benefits of Decentralization Top management freed to concentrate on strategy. Lower-level managers gain experience in decision-making. Decision-making authority leads to job satisfaction. Lower-level decisions often based on better information. Lower level managers can respond quickly to customers. Decentralization in Organizations Disadvantages of Decentralization Lower-level managers may make decisions without seeing the big picture. May be a lack of coordination among autonomous managers. Lower-level managers objectives may not be those of the organization. May be difficult to spread innovative ideas in the organization. Cost, Profit, and Investments Centers Responsibility Center Cost Center Profit Center Investment Center Cost, profit, and investment centers are all known as responsibility centers. Cost Center A segment whose manager has control over costs, but not over revenues or investment funds. Profit Center A segment whose manager has control over both costs and revenues, but no control over investment funds. Revenues Sales Interest Other Costs Mfg. costs Commissions Salaries Other Investment Center A segment whose manager has control over costs, revenues, and investments in operating assets. Corporate Headquarters Responsibility Centers Salty Snacks Product Manger Bottling Plant Manager Warehouse Manager Distribution Manager Beverages Product Manager Confections Product Manager Operations Vice President Finance Chief FInancial Officer Legal General Counsel Personnel Vice President Superior Foods Corporation Corporate Headquarters President and CEO Cost Centers Investment Centers Superior Foods Corporation provides an example of the various kinds of responsibility centers that exist in an organization. Responsibility Centers Salty Snacks Product Manger Bottling Plant Manager Warehouse Manager Distribution Manager Beverages Product Manager Confections Product Manager Operations Vice President Finance Chief FInancial Officer Legal General Counsel Personnel Vice President Superior Foods Corporation Corporate Headquarters President and CEO Superior Foods Corporation provides an example of the various kinds of responsibility centers that exist in an organization. Profit Centers Responsibility Centers Salty Snacks Product Manger Bottling Plant Manager Warehouse Manager Distribution Manager Beverages Product Manager Confections Product Manager Operations Vice President Finance Chief FInancial Officer Legal General Counsel Personnel Vice President Superior Foods Corporation Corporate Headquarters President and CEO Cost Centers Superior Foods Corporation provides an example of the various kinds of responsibility centers that exist in an organization. Decentralization and...
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Chapter 11 - Chapter 11 Segment Reporting and...

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