CH 6 Notes AFM 482
In an age of decentralization, an effective method is needed to account for the transfer of goods and services
among divisions or units within the same company.
Objectives of Transfer Prices
Transfer Pricing is the mechanism that allows
AFM 482 CH 13 Notes
The actual controls for each type of strategy are of
course dependent on a variety of internal and external factors.
Corporate Strategy Controls
Corporate strategies span between single industry
companies and unrelated diversified cong
CH 5 Notes AFM 482
A Profit Centre is the RC whose financial performance is measured as the difference between revenues and
A functional organization is one in which each principal function (i.e. manufacturing) is organize
AFM 482 - CH 4 Notes
A Responsibility Centre (RC) is an organization unit
that is headed by a manager who is responsible for its activities. A company is therefore the collection of
It exists to accomplish o
CH 8 Notes AFM 482
This discussion assumes a large organization with an HQ and decentralized business units.
Nature of Strategic Planning
Strategic Planning is the process of deciding on the programs that the organization will undertake and on the
CH 7 Notes AFM 482
In a profit center, the profit is compared as a function of the difference between revenues and expenses.
In an investment center, the profit is compared as a function of the difference between profit and the assets used to
AFM 482 CH 2 Notes
A corporation has many goals. These goals are often heavily impacted by the founders of those companies.
Examples of goals in corporations include:
Profitability measured by Return on Investment: Revenues Expenses * Revenues
AFM 482 CH 3 Notes
Good management control systems influence behavior is a goal congruent manner. It is therefore their goal to
ensure that goal congruence exists between the individual and overall corporate goals. In a goal congruent
AFM 482 CH 1 Notes
Management Involvement in a business is either:
Strategy is first developed through a formal and rational process
Strategy than dictates the design of the management team
The above step is appropriate where the industry is predicable