Acc202_FinalExamStudyGuide

Acc202_FinalExamStudyGuide - Chapter 11 Decentralization o...

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Chapter 11 Decentralization o Advantages Top management can concentrate on bigger issues (overall strategy) More accurate information from managers who run day-to-day operations Eliminating layers of decision making/approvals organizations respond quicker to customers Help train lower-level managers for higher-level jobs (giving them decision making power) Also increase their motivation/job satisfaction o Disadvantages Lower-level managers make decisions without looking at big picture Coordination from these decisions maybe lacking These objectives/decisions may clash with objectives of entire organization Spreading innovative ideas maybe difficult in a decentralized organization (can’t share ideas from different parts of company) Responsibility Center – Used for any part of an organization whose manager has control over and is accountable for cost, profit, or investments o 3 Types of Responsibility Centers Cost Center Profit Center Investment Center Cost Center – Manager has control over costs, but not over revenue or the use of investment funds o Ex: Accounting, finance, general administration, legal, personnel, and manufacturing facilities Profit Center – Manager has control over both costs and revenue, but not over the use of investment funds o Ex: Manager in charge of Six Flags controls revenues/costs but not control over investments, Manager of different products, etc. Investment Center – Manager has control over cost, revenue, and investments in operating assets o Ex: VP of Truck Division at GM, President/CEO at Superior Foods Corp. Segment – A part or activity of an organization about which managers would like cost, revenue, or profit data
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o Ex: Cost/Profit/Investment centers, sales territories, individual stores, service centers, Manu plants, marketing departments, individual customers, and product lines
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This note was uploaded on 04/06/2011 for the course ACC 201 taught by Professor Bokmier during the Winter '10 term at Michigan State University.

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Acc202_FinalExamStudyGuide - Chapter 11 Decentralization o...

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