Chapter_10-Student - CHAPTER 10 Class Notes Segment...

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CHAPTER 10 Class Notes Segment Reporting, Decentralization, and the Balanced Scorecard Compiled by: Lei Wang, CPA Certain materials used with permission of Janice Fergusson or McGraw-Hill Companies, Inc. Chapter 10 begins with a discussion of the following topics: 1. Advantages and disadvantages of Decentralization 2. Responsibility Accounting: (a) Three types of responsibility centers Cost Centers Profit Centers Investment Centers You should read pages 454-457 for an understanding of these topics. Decentralization and Segment Reporting Effective decentralization requires segment reporting . In addition to the companywide income statement, reports are needed for individual segments of the organization. Segment – a part or activity of an organization that management would like cost, revenue, or profit data. Examples: divisions, sales territories, individual stores, service centers, manufacturing plants, marketing department, individual customers, product lines, etc. Preparing a segmented income statement: Sales and contribution margin. Sales for each segment should be identified along with variable costs, resulting in a contribution margin. The segment contribution margin is especially valuable in
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Chapter_10-Student - CHAPTER 10 Class Notes Segment...

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