ACCT 102 Lecture Notes Chap 22 Decentralized Ops

ACCT 102 Lecture Notes Chap 22 Decentralized Ops - ACCT 102...

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ACCT 102 – Managerial Accounting Chapter 22– Decentralized Operations and Performance Evaluation – aka Responsibility Accounting Chapter Notes - Schmidt Decentralization – literally means “not centralized”. It means taking power away from the top and delegating it to lower level managers. A company is organized into divisions or subunits with a varying degree of responsibilities. This becomes necessary as a company becomes so large and complex that there is a need to break it town into separate divisions to increase efficiency and effectiveness. Advantages and Disadvantages – See separate handout. Departmental Accounting Systems - The accounting system needs to be designed to provide information based on the varying levels of activity. When accounts are maintained separately in the G/L the some type of departmental spreadsheet analysis should be done. Department Expense Allocation – Decentralization creates some accounting challenges. A properly designed accounting system can help negate this. When that’s not possible, more analysis may be needed to charge direct expenses properly and allocate indirect expenses in a reasonable manner. Direct and Indirect Expenses Direct expenses can be readily traced to a department and are for the sole benefit of that department. Indirect expenses usually have a joint benefit to many
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This note was uploaded on 03/08/2012 for the course ACCT 102 taught by Professor D.schmidt during the Winter '12 term at Cerritos College.

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ACCT 102 Lecture Notes Chap 22 Decentralized Ops - ACCT 102...

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