University:
California State University, Northridge
Course:
ACCT 230 | Introduction to Managerial Accounting
Academic year:

2024
Views:

280

Pages:

14
Author:

Escafewaw5h4

Chapter 10 Decentralization Part 1 Decentralization in Organizations Benefits of Decentralization Lower-level managers gain experience in decision-making. Lower-level decision often based on better information. Top management freed to concentrate on strategy. Decision-making authority leads to job satisfaction. Lower-level managers can respond quickly to customers. 10-2 Decentralization in Organizations Lower-level managers may make decisions without seeing the “big picture.” Lower-level manager’s objectives may not be those of the organization. May be a lack of coordination among autonomous managers. Disadvantages of Decentralization May be difficult to spread innovative ideas in the organization. 10-3 Cost, Profit, and Investments Centers Cost Center Profit Center Cost, profit, and investment centers are all Responsibility known as Center responsibility centers. Investment Center 10-4 Cost, Profit, and Investments Centers Cost Center A segment whose manager has control over costs, but not over revenues or investment funds. 10-5 Cost, Profit, and Investments Centers Profit Center A segment whose manager has control over both costs and revenues, but no control over investment funds. Revenues Sales Interest Other Costs Mfg. costs Commissions Salaries Other 10-6 Cost, Profit, and Investments Centers Investment Center A segment whose manager has control over costs, revenues, and investments in operating assets. Corporate Headquarters 10-7 Responsibility Centers Investment Centers Operations Vice President Salty Snacks Product Manager Bottling Plant Manager Beverages Product Manager Warehouse Manager Superior Foods Corporation Corporate Headquarters President and CEO Finance Chief FInancial Officer Confections Product Manager Distribution Manager Legal General Counsel Personnel Vice President Cost Centers Superior Foods Corporation provides an example of the various kinds of responsibility centers that exist in an organization. 10-8 Responsibility Centers Superior Foods Corporation Corporate Headquarters President and CEO Operations Vice President Salty Snacks Product Manager Bottling Plant Manager Beverages Product Manager Warehouse Manager Finance Chief FInancial Officer Confections Product Manager Distribution Manager Legal General Counsel Personnel Vice President Profit Centers Superior Foods Corporation provides an example of the various kinds of responsibility centers that exist in an organization. 10-9 Responsibility Centers Superior Foods Corporation Corporate Headquarters President and CEO Operations Vice President Salty Snacks Product Manager Bottling Plant Manager Beverages Product Manager Warehouse Manager Finance Chief FInancial Officer Confections Product Manager Distribution Manager Legal General Counsel Personnel Vice President Cost Centers Superior Foods Corporation provides an example of the various kinds of responsibility centers that exist in an organization. 10-10 Decentralization and Segment Reporting A segment is any part or activity of an organization about which a manager seeks cost, revenue, or profit data. A segment can be . . . An Individual Store Quick Mart A Sales Territory A Service Center 10-11 Traceable and Common Fixed Costs In segment reports, traceable fixed costs should be distinguished from common fixed costs. 10-12 Identifying Traceable Fixed Costs Traceable costs arise because of the existence of a particular segment and would disappear over time if the segment itself disappeared. No computer division means . . . No computer division manager. 10-13 Identifying Common Fixed Costs Common costs arise because of the overall operation of the company and would not disappear if any particular segment were eliminated. No computer division but . . . We still have a company president. 10-14