Assignment Responsibility Center Presentation.ppt
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This document discusses different types of responsibility centers, including centers of cost, centers of revenue, profit centers, and investment centers. It describes how each center controls different aspects like costs, revenues, or investments. The document also covers topics like evaluating responsibility centers based only on the factors they control, using performance measures to influence rather than just evaluate, and how incremental analysis examines relevant revenues and expenses to make the best decisions.
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A responsibility center is an organizational unit that is held accountable for costs, revenues, or investment funds associated with its activities. There are four main types of responsibility centers: revenue centers, which focus on maximizing revenue; cost centers, which focus on minimizing costs; profit centers, which are responsible for overall profits; and investment centers, which are evaluated based on return on investment. Responsibility centers aim to improve organizational performance by decentralizing decision-making, facilitating comparison of performance across units, and increasing employee motivation.
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This document discusses responsibility centers, which are organizational units for which a manager is responsible. It provides examples like a store or workstation. Attributes are discussed, noting a responsibility center operates like a small business promoting the larger organization's interests. Goals should be specific, measurable, and compatible. Financial controls like costs, revenues, and profits are used to measure contributions which vary by unit. Effectiveness means achieving intended results while efficiency means output per input. Different types of responsibility centers are outlined, including cost centers measured by input, expense centers with no output relation, revenue centers responsible for sales, and profit centers with complete decision-making evaluated on profits.
Financial performance evaluation parameters
1. Responsibility accounting is a system that measures the results of responsibility centers and compares them to expected outcomes. It helps managers record plans and performance.
2. There are four main types of responsibility centers: revenue centers, which measure output in monetary terms; cost centers, which measure inputs in monetary terms; profit centers, which measure both inputs and outputs; and investment centers, which measure inputs, outputs, and assets.
3. Key performance metrics for responsibility centers include return on investment, residual income, return on assets, and economic value added. These metrics help evaluate managerial performance based on profitability and investment.
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This document discusses profit centers and how to evaluate their performance. A profit center is a responsibility center whose manager controls both revenues and costs. To delegate decisions to managers, they must have relevant information and a way to measure effectiveness. Business units are often set up as profit centers. Functional units like marketing, manufacturing, and services can also be profit centers. Performance is measured using various profitability metrics like contribution margin, direct profit, and net income.
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Anivesh Goyal from Prestige Institute of Management presented on responsibility centers, cost centers, and profit centers. A responsibility center is a subunit of a company where a manager is responsible. Cost centers focus only on controlling costs, while profit centers control both costs and revenues. Key advantages of these centers include decentralized decision making, performance comparisons, and increased staff interest.
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A responsibility center is an organizational unit that is held accountable for costs, revenues, or investment funds associated with its activities. There are four main types of responsibility centers: revenue centers, which focus on maximizing revenue; cost centers, which focus on minimizing costs; profit centers, which are responsible for overall profits; and investment centers, which are evaluated based on return on investment. Responsibility centers aim to improve organizational performance by decentralizing decision-making, facilitating comparison of performance across units, and increasing employee motivation.
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This document discusses responsibility centers, which are organizational units for which a manager is responsible. It provides examples like a store or workstation. Attributes are discussed, noting a responsibility center operates like a small business promoting the larger organization's interests. Goals should be specific, measurable, and compatible. Financial controls like costs, revenues, and profits are used to measure contributions which vary by unit. Effectiveness means achieving intended results while efficiency means output per input. Different types of responsibility centers are outlined, including cost centers measured by input, expense centers with no output relation, revenue centers responsible for sales, and profit centers with complete decision-making evaluated on profits.
Financial performance evaluation parameters
1. Responsibility accounting is a system that measures the results of responsibility centers and compares them to expected outcomes. It helps managers record plans and performance.
2. There are four main types of responsibility centers: revenue centers, which measure output in monetary terms; cost centers, which measure inputs in monetary terms; profit centers, which measure both inputs and outputs; and investment centers, which measure inputs, outputs, and assets.
3. Key performance metrics for responsibility centers include return on investment, residual income, return on assets, and economic value added. These metrics help evaluate managerial performance based on profitability and investment.
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Anivesh Goyal from Prestige Institute of Management presented on responsibility centers, cost centers, and profit centers. A responsibility center is a subunit of a company where a manager is responsible. Cost centers focus only on controlling costs, while profit centers control both costs and revenues. Key advantages of these centers include decentralized decision making, performance comparisons, and increased staff interest.
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This document discusses various management techniques that can help directors and managers improve efficiency and effectiveness. It describes techniques like profitability analysis, ratio analysis, and productivity ratios that systematically analyze financial data. While techniques provide objective analysis, good judgment is also needed. The document recommends an interactive software to help business owners better understand key financial concepts and indicators to make better decisions.
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There are four types of responsibility centers: cost centers, revenue centers, profit centers, and investment centers. Each center type has a specific role and accountability. Cost centers are accountable for meeting budgeted cost goals, revenue centers are responsible for meeting sales targets, profit centers are accountable for profitability, and investment centers are accountable for both profitability and return on invested funds. Managers of each center type use an individual budget and incremental analysis for decisions like accepting special orders, making or buying products, selling or further processing products, and changes to production or technology.
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1. Calculate net operating profit after tax (NOPAT) - the profit generated from operations after accounting for taxes.
2. Determine the operating capital employed - the net assets used to generate profits, including working capital and fixed assets.
3. Calculate the weighted average cost of capital (WACC) - the minimum return expected by providers of capital.
4. Compute the capital charge by multiplying the cost of capital by the operating capital.
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A responsibility center is an organizational unit headed by a manager who is responsible for its activities and outputs. The objective is to help implement strategies set by senior management. Responsibility centers can be measured based on efficiency, which is the ratio of outputs to inputs, and effectiveness, which is determined by the relationship between a center's output and its objectives. Common types of responsibility centers include revenue centers, expense centers, administrative centers, and research and development centers, which differ in how inputs and outputs are defined and measured. Responsibility budgeting involves allocating financial resources to each center for the budget period using methods like incremental budgeting or zero-based budgeting.
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- The definition and importance of controlling as monitoring activities to ensure plans are followed.
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- Control techniques help managers identify variances from plans, take corrective actions, and improve future performance.
- Effective control systems empower employees and protect organizations from disruptions.
Responsibilitycentersfinal 130122112204-phpapp01
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The document provides details on each type of center. Revenue centers aim to maximize revenue within a promotion budget. Cost centers seek to minimize costs for a fixed output. Profit centers have autonomy over inputs, product mix, prices and profits. Performance is measured based on budgets and actual profits. Responsibility centers aim to improve decision making, speed, training and motivation by delegating accountability and
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Image of multicolored canvas painting.
istockphoto
Learning Objectives
Understand concepts in responsibility accounting.
Be able to provide a framework for rational business decision making, and understand how to apply these concepts for specific types of situations.
Apply capital budgeting methods and discounted cash flow concepts.
Know how to make proper long-term investment decisions.
8.1
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In general, managers should be held accountable for the results of their decisions and business execution. Without accountability based on performance-related feedback, the business will not perform at its best, and areas in need of improvement may not be identified on a timely basis. Business feedback is often based on financial results. You have already seen how budgets and variances are used to help identify areas for improvement. Because managers are accountable for their decisions, actions, and outcomes, their performance measures should align around the department, product, division, or other business for which they are responsible. In other words, the attribution of responsibility tends to follow the organizational structure of the business.
Sometimes, a business has a highly dispersed design, with decisions nested with lower level managers. Other businesses generate decisions only at the upper levels, and lower level personnel are basically charged with execution of defined actions. Proper implementation of responsibility accounting concepts stipulates that performance measures be aligned with the business organization structure. In other words, accountability should map to responsibility. Proper design of performance measurement systems therefore requires that the management accountant carefully consider the organizational structure. Sometimes performance measures are only appropriate on an aggregated basis, such as where the organization is structured as a top–down, command-and-control, centralized decision-making entity. As lower level managers are given increased authority, so too should the accountability system be modified to provide more disaggregated performance measures. Although quite logical, this presents measurement challenges.
Different types of units must be evaluated using alternative models. For example, some units do not generate any revenue. They exist to provide support services to other departments within the entity. Other business segments may have clear cost and revenue functions, and they might be evaluated on their profits. Given this observation, it is common for businesses to characterize areas of specific responsibility as cost centers, profit centers, or investment centers.
A cost center usually lacks clear revenue functions. Typical departments that are regarded as cost centers include accounting, human resources, maintenance, and most administrative groupings. Cost control is the key eval ...
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There are four types of responsibility centers: cost centers, revenue centers, profit centers, and investment centers. Each center type has a specific role and accountability. Cost centers are accountable for meeting budgeted cost goals, revenue centers are responsible for meeting sales targets, profit centers are accountable for profitability, and investment centers are accountable for both profitability and return on invested funds. Managers of each center type use an individual budget and incremental analysis for decisions like accepting special orders, making or buying products, selling or further processing products, and changes to production or technology.
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Here are the key steps to calculate EVA:
1. Calculate net operating profit after tax (NOPAT) - the profit generated from operations after accounting for taxes.
2. Determine the operating capital employed - the net assets used to generate profits, including working capital and fixed assets.
3. Calculate the weighted average cost of capital (WACC) - the minimum return expected by providers of capital.
4. Compute the capital charge by multiplying the cost of capital by the operating capital.
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This document discusses responsibility centers, which are organizational units headed by managers responsible for their activities. There are four types of responsibility centers: cost centers, where managers are accountable for controlling costs; revenue centers, where managers are accountable for generating revenue; profit centers, where managers are responsible for both revenues and costs; and investment centers, where managers are accountable for generating revenue, controlling costs, and creating investment returns. Each type is evaluated based on different metrics like costs, revenues, profits, or returns on investment.
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The document provides an overview of controlling concepts including:
- The definition and importance of controlling as monitoring activities to ensure plans are followed.
- Types of control include budgetary control, standard costing, just-in-time and ABC analysis.
- Control techniques help managers identify variances from plans, take corrective actions, and improve future performance.
- Effective control systems empower employees and protect organizations from disruptions.
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The document discusses responsibility centers, which are organizational units held accountable for activities and goals. There are four main types of responsibility centers: revenue centers, which focus on sales generation; cost centers, which control costs but not revenues; profit centers, which are responsible for overall profits; and investment centers, which control costs, revenues and investment funds.
The document provides details on each type of center. Revenue centers aim to maximize revenue within a promotion budget. Cost centers seek to minimize costs for a fixed output. Profit centers have autonomy over inputs, product mix, prices and profits. Performance is measured based on budgets and actual profits. Responsibility centers aim to improve decision making, speed, training and motivation by delegating accountability and
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The document provides an analysis of strategic options for NewAlliance Bank's merchant services portfolio, including maintaining the current model, expanding through an ISO partnership, transforming to a more "bank centric" model, or outsourcing the portfolio. It summarizes the results of a functional review of the portfolio in areas like risk management, sales, and processing. A decision matrix is used to evaluate the risk and reward tradeoffs of each strategic option.
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Chapter 8
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Image of multicolored canvas painting.
istockphoto
Learning Objectives
Understand concepts in responsibility accounting.
Be able to provide a framework for rational business decision making, and understand how to apply these concepts for specific types of situations.
Apply capital budgeting methods and discounted cash flow concepts.
Know how to make proper long-term investment decisions.
8.1
Responsibility Accounting Concepts
In general, managers should be held accountable for the results of their decisions and business execution. Without accountability based on performance-related feedback, the business will not perform at its best, and areas in need of improvement may not be identified on a timely basis. Business feedback is often based on financial results. You have already seen how budgets and variances are used to help identify areas for improvement. Because managers are accountable for their decisions, actions, and outcomes, their performance measures should align around the department, product, division, or other business for which they are responsible. In other words, the attribution of responsibility tends to follow the organizational structure of the business.
Sometimes, a business has a highly dispersed design, with decisions nested with lower level managers. Other businesses generate decisions only at the upper levels, and lower level personnel are basically charged with execution of defined actions. Proper implementation of responsibility accounting concepts stipulates that performance measures be aligned with the business organization structure. In other words, accountability should map to responsibility. Proper design of performance measurement systems therefore requires that the management accountant carefully consider the organizational structure. Sometimes performance measures are only appropriate on an aggregated basis, such as where the organization is structured as a top–down, command-and-control, centralized decision-making entity. As lower level managers are given increased authority, so too should the accountability system be modified to provide more disaggregated performance measures. Although quite logical, this presents measurement challenges.
Different types of units must be evaluated using alternative models. For example, some units do not generate any revenue. They exist to provide support services to other departments within the entity. Other business segments may have clear cost and revenue functions, and they might be evaluated on their profits. Given this observation, it is common for businesses to characterize areas of specific responsibility as cost centers, profit centers, or investment centers.
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Business valuation is the method involved in deciding the financial worth of an organization. A basic activity includes surveying different variables to show up at a gauge of what the business is worth in the commercial center. Understanding the worth of a business is fundamental for different purposes, including consolidations and acquisitions, raising capital, tax collection, Financial reporting and estate preparation.
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আমাদের সবার জন্য খুব খুব গুরুত্বপূর্ণ একটি বই ..বিসিএস, ব্যাংক, ইউনিভার্সিটি ভর্তি ও যে কোন প্রতিযোগিতা মূলক পরীক্ষার জন্য এর খুব ইম্পরট্যান্ট একটি বিষয় ...তাছাড়া বাংলাদেশের সাম্প্রতিক যে কোন ডাটা বা তথ্য এই বইতে পাবেন ...
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Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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www.StokeNewingtonHistory.com
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- 2. Responsibility Centers A manager's responsibility centre is an organisational unit for which he or she is responsible.Manager of the Center for AccountabilityDetermine your objectives.Promote long-term objectives.Encourage each responsibility center's actions to be coordinated.
- 3. Responsibility Center Types – I Centers of CostCosts: controlCandidate: group in charge of processingActual costs are compared to target/standard costs.costs now compared. expenses in the pastOther evaluations
- 4. Responsibility Center Types – II Centers of RevenueRevenues: controlCandidate: a corporation's sales officeThe main criterion for evaluation is income (net revenue).Consequences that are unfavourable
- 5. Responsibility Center Types – III Profit Centers are businesses that make money.Revenues and costs under controlCandidate: individual chain operating unitsNo one in the company can oversee performance if they rely solely on the unit's earnings.bad business decisionsa series of bad local choicesQuality, material usage, labour utilisation, and customer service
- 6. Responsibility Center Types – IV Revenues, expenditures, and investment are all under the control of investment centres.Independent company candidate Evaluation: Return on Investment (ROI) in relation to the aim
- 7. Evaluating Responsibility Centers The manager of a responsibility centre should only be held accountable for the earnings, expenses, or investments that responsibility centre workers are in charge of.Exclude: Revenues, expenses, or investments that are not under the control of the responsibility centre.
- 8. Using Performance Measures to Influence (instead of evaluate) Managers are more driven to discover activities that might impact incurred costs or produced revenues when additional expenses or revenues are included in performance indicators.
- 9. Incremental Analysis Incremental analysis, also known as marginal or differential analysis, is a technique for analysing financial data and making decisions. It examines the relevant revenues and/or expenses for each choice, as well as the predicted impact on future earnings.
- 10. Reasons for Incremental Analysis To make the best use of limited resources in order to get the best possible sales mixto get rid of a sector that isn't lucrativeProducts for sale or additional processingMaking a purchase, manufacturing, or manufacturing a product decisionAcceptance of business decision
- 11. How Does Each Center Perform Incremental Analysis? Analyze the performance of the other units to determine if we should invest or withdraw funds.Analyze if we need to produce or outsource a component at the investment centre.Profit Center: Determine if we need to sell a product or continue processing it.
- 12. References Analyze in Small Steps (n.d.). Accounting Terminology Glossary Answers.com, http://www.answers.com/topic/incremental-analysis, retrieved on July 8, 2008.Center for Responsibilities (n.d.). Accounting Terminology Glossary Answers.com, http://www.answers.com/topic/responsibility-center, retrieved on July 8, 2008.