CHAPTER 9
9-1
Chapter Overview
Responsibility Accounting
•
Decentralization
•
Responsibility Centers
Performance Measurement
•
Return on Investment
•
Residual Income
•
Balanced Scorecard
Responsibility Reports
•
Guidelines
•
Management by Exception
•
Controllability
An accounting system that
provides
information
. . .
Responsibility Accounting
Relating to the
responsibilities of
individual
managers.
To evaluate
managers on
controllable items.
Accounting as the Language
of Business
Decision Making is Pushed Down
Supervisor
Supervisor
Middle
Management
Supervisor
Supervisor
Middle
Management
Top
Management
Decentralization often occurs as
organizations continue to grow.
Responsibility Accounting
Decentralization
The delegation of freedom to make decisions
is called
decentralization
Continuum
Improves quality
of decisions
Encourages upper-level management to
concentrate on strategic decisions
Improves
productivity
Develops
lower-level
managers
Improves
performance
evaluation
Advantages
Responsibility Accounting
Decentralization
Successful implementation of
responsibility
accounting
depends on clear lines of authority
and clearly defined levels of responsibility.
Vice President
of Finance
Department Manager
Store Manager
Vice President
of Operations
Vice President
of Marketing
President
Board of Directors
Responsibility Accounting