Responsibility accounting
•Download as PPTX, PDF•
2 likes•79 views
Responsibility accounting assigns responsibility for controlling costs to individuals within an organization. Large businesses are divided into responsibility centers to give managers clearer areas of control. There are four main types of responsibility centers: cost centers, where managers control expenses but not revenues; profit centers, where managers control both revenues and costs; revenue centers, where managers aim to maximize sales; and investment centers, where managers are responsible for profits and asset usage.
Report
Share
Report
Share
Recommended
Management Accounting- Responsibility Accounting
Responsibility accounting is used to assign accountability for costs to managers of responsibility centers. It collects planned and actual accounting data on inputs and outputs of these centers. This allows organizations to determine where costs are incurred and who is responsible. It also measures the efficiency of centers and managers through variances. There are three main types of responsibility centers - cost centers, which are accountable for expenses; profit centers, which are accountable for both revenues and expenses; and investment centers, which are accountable for profits and returns on capital employed.
Centers
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.
Responsibility center training
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.
Responsibility centers
There are 3 types of responsibility centers - cost centers, profit centers, and investment centers. A cost center manager is responsible only for costs, a profit center manager is responsible for both revenues and costs, and an investment center manager is responsible for revenues, costs, and investments. Responsibility accounting provides managers with budget and actual cost comparisons to evaluate performance. Return on investment is considered the best performance measure as it shows how effectively a manager uses available assets.
Types of responsibility centres
There are several types of responsibility centres that organizations use to evaluate performance. Cost centres are segments responsible for costs incurred but not revenues, and include production, service, and ancillary manufacturing centres. Revenue centres focus on raising sales revenue. Profit centres are responsible for both expenses and revenues. Contribution centres are evaluated based on the difference between sales and variable costs. Investment centres give managers control over revenues, costs, and investment of assets.
Divisional Performance Measurement & Transfer Pricing
This document discusses transfer pricing and divisional performance measurement. It begins by outlining the multinational enterprise perspective on centralizing cash and minimizing tax liability. It then defines the arm's length principle for pricing intra-firm transactions similarly to open market conditions. Five OECD transfer pricing methods are described. The importance of tax compliance as the central objective in transfer pricing is emphasized. Contingency approaches and trade-offs between tax compliance and management control system objectives are examined. The balanced scorecard is discussed as a performance measurement tool. The influences of tax compliance on responsibility accounting are considered.
Whiz calculator mcs ch.4_case
The document discusses Whiz Calculator's implementation of a new sales expense budgeting method. Bernard Riesman, the new president, found the old incremental budgeting method unsatisfactory because expense estimates were uncertain and did not adjust for changing sales conditions. The new method sets variable expense standards based on a certain amount per sales dollar. It establishes a minimum sales volume threshold. This flexible budgeting method is more accurate than the old one in relating expenses to expected output. It should be adopted, but the company could improve it by gathering more market data to account for variable factors between regions.
Responsibility accounting - Part A
Bangalore University - M.Com III Sememster - Accounting and Taxation specialization - Accounting for Managerial Decisions (AMD) - Module 3 - Responsibility Accounting and Divisional Performance Measurement - Theory with Formats and examples.
Recommended
Management Accounting- Responsibility Accounting
Responsibility accounting is used to assign accountability for costs to managers of responsibility centers. It collects planned and actual accounting data on inputs and outputs of these centers. This allows organizations to determine where costs are incurred and who is responsible. It also measures the efficiency of centers and managers through variances. There are three main types of responsibility centers - cost centers, which are accountable for expenses; profit centers, which are accountable for both revenues and expenses; and investment centers, which are accountable for profits and returns on capital employed.
Centers
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.
Responsibility center training
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.
Responsibility centers
There are 3 types of responsibility centers - cost centers, profit centers, and investment centers. A cost center manager is responsible only for costs, a profit center manager is responsible for both revenues and costs, and an investment center manager is responsible for revenues, costs, and investments. Responsibility accounting provides managers with budget and actual cost comparisons to evaluate performance. Return on investment is considered the best performance measure as it shows how effectively a manager uses available assets.
Types of responsibility centres
There are several types of responsibility centres that organizations use to evaluate performance. Cost centres are segments responsible for costs incurred but not revenues, and include production, service, and ancillary manufacturing centres. Revenue centres focus on raising sales revenue. Profit centres are responsible for both expenses and revenues. Contribution centres are evaluated based on the difference between sales and variable costs. Investment centres give managers control over revenues, costs, and investment of assets.
Divisional Performance Measurement & Transfer Pricing
This document discusses transfer pricing and divisional performance measurement. It begins by outlining the multinational enterprise perspective on centralizing cash and minimizing tax liability. It then defines the arm's length principle for pricing intra-firm transactions similarly to open market conditions. Five OECD transfer pricing methods are described. The importance of tax compliance as the central objective in transfer pricing is emphasized. Contingency approaches and trade-offs between tax compliance and management control system objectives are examined. The balanced scorecard is discussed as a performance measurement tool. The influences of tax compliance on responsibility accounting are considered.
Whiz calculator mcs ch.4_case
The document discusses Whiz Calculator's implementation of a new sales expense budgeting method. Bernard Riesman, the new president, found the old incremental budgeting method unsatisfactory because expense estimates were uncertain and did not adjust for changing sales conditions. The new method sets variable expense standards based on a certain amount per sales dollar. It establishes a minimum sales volume threshold. This flexible budgeting method is more accurate than the old one in relating expenses to expected output. It should be adopted, but the company could improve it by gathering more market data to account for variable factors between regions.
Responsibility accounting - Part A
Bangalore University - M.Com III Sememster - Accounting and Taxation specialization - Accounting for Managerial Decisions (AMD) - Module 3 - Responsibility Accounting and Divisional Performance Measurement - Theory with Formats and examples.
Chapter 10 : Responsible Accounting
Responsibility accounting involves dividing an organization into responsibility centers and assigning costs and revenues to each center. The key types of responsibility centers are cost centers, which managers are responsible for costs, profit centers where managers are responsible for both costs and revenues, and investment centers where managers are responsible for costs, revenues, and capital employed. Effective responsibility accounting requires setting targets for each center, tracking actual performance against targets, reporting variances to management, and taking corrective actions. It aims to evaluate performance and provide feedback to improve future operations.
Features of management accounting
Management accounting selects only the most relevant information from financial accounting data to help management make planning and control decisions. It emphasizes future projections using tools like standard costing, variances, and budgets. Management accounting modifies, analyzes, and interprets financial data to provide management with supporting information for decision-making. It allows flexibility and considers non-financial factors, with the goal of improving efficiency and achieving organizational objectives.
Responsibility centers in MCS
Responsibility centers are organizational units that are accountable for specific activities or functions. There are four main types of responsibility centers: revenue centers focus on sales generation; cost centers control expenses; profit centers influence the bottom line; and investment centers compare profits to assets used. Each responsibility center has defined inputs like funding or resources, and outputs like sales, costs, profits, or returns on investment. Key performance is assessed by the relationship between a center's inputs and outputs.
Management control-system
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.
5. Economic value added (EVA) is calculated as NOPAT minus the capital charge. EVA represents the profit generated above the minimum return required by providers of capital.
So in summary, EVA
Management Control System
This document discusses management control systems and responsibility centers. It defines different types of responsibility centers like cost centers, revenue centers, and profit centers. It also discusses different performance measures used to evaluate responsibility centers like ROI, ROA, and MVA. The document discusses in detail concepts like return on investment, residual income, and economic value added which are used to measure the performance of investment centers. It also talks about transfer pricing and different methods used to determine internal transfer prices between divisions of a company.
Responsibility center mcs ch.4
This document discusses management control systems and responsibility centers. It defines management control as ensuring resources are used efficiently and effectively to accomplish organizational goals. Responsibility centers are organizational units headed by managers responsible for activities and objectives. There are several types of responsibility centers including engineered expense centers, discretionary expense centers, profit centers, and revenue centers. The document outlines the characteristics, budgeting processes, and performance measurement for each type. It also addresses challenges with administrative centers, R&D centers, and discretionary expenses.
Enterprise risk management
This document discusses enterprise risk management (ERM) and a probability risk matrix. ERM aims to identify and prepare for potential dangers that could interfere with organizational objectives. A probability risk matrix is a tool that ranks and prioritizes risks based on their probability and potential impact. It helps determine which risks need detailed response plans by understanding the relative priority of each risk. The presentation goes on to cover risk concepts and classifications before closing.
Presentation4
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.
Balanced scorecard and fund flow statement
The document discusses the Balanced Scorecard, which measures organizational performance across four perspectives: financial, customer, internal processes, and learning and growth. It is used as a tool to improve communication between employees and management and monitor strategic objectives. The Balanced Scorecard measures objectives, measures, targets, and initiatives for each perspective. It aims to increase strategic focus, improve performance through measurements, and enhance communication about strategy and vision.
MCS
A management control system is defined as a set of policies and procedures designed to ensure operations proceed according to plan. It focuses on responsibility centers, each headed by a manager who is accountable for their unit. Managers use planned and actual data to monitor performance, evaluating metrics like budgets, forecasts, and standards. The control process is continuous, like a navigator tracking a ship's course. It covers all company operations and generates integrated information to coordinate activities across the organization. The system emphasizes financial figures to allow comparison across different operational metrics. Reporting occurs at regular intervals so line and staff managers can work together to encourage actions that serve the company's best interests through an interactive yet systematic process.
Bcp task 8
This document outlines the key components and process for developing a business continuity plan (BCP). It discusses the benefits of having a BCP, including keeping businesses operating during incidents and reducing disruption costs. A typical BCP contains sections on governance, business impact analysis, continuity arrangements, readiness procedures, and quality assurance. The process involves developing questionnaires, conducting workshops, validating information, identifying resource needs, and developing recovery strategies, plans, and procedures. It also covers training, testing exercises, and updating the BCP based on lessons learned. When disruptions occur, the response involves incident management, communications, and operations management to continue critical services, followed by recovery and restoration efforts managed through an emergency operations center.
Valuation of good will
This document discusses the valuation of goodwill for businesses. Goodwill valuation is used to determine the remaining value of a company if it is purchased, and takes into account factors like reputation, management efficiency, market situation, and competitive advantages. Goodwill needs to be valued in cases like company amalgamation, takeovers, share conversions, and management changes. Key factors that affect goodwill valuation include historical and expected future profits, capital employed, market share, brand position, technology, and relationships. Common methods to value goodwill are the average profits method, super profits method, and capitalization method. These methods calculate goodwill using figures like average profits over several years, super profits above a normal rate of return, and capitalizing average
Controlling(MARKETING 11)
K12CURRICULUM
Feedforward.Concurrent.Feedback Control.Budgetting. Effective Control Systems. The Importance of control. Areas of control. Elements in an internal Control. Financial Budget; Oraganizational Functions.
Reported by... Grade11 students
Majoycvbhdgkjehf bvnfdyKINDNESS2K16
Responsibility accounting
Responsibility accounting is a system that assigns revenues and costs to responsibility centers based on who has responsibility over that area. It collects both planned and actual accounting information for these centers. Key features include identifying responsibility centers, assigning controllable costs, setting targets, comparing actual to planned performance, and reporting deviations. Responsibility centers can be cost centers, profit centers, or investment centers depending on if they are responsible for costs, revenues, or both. This system aims to improve performance by assigning responsibility and enabling better planning, control, decision-making, and management by exception. However, it requires proper organizational structure and delegation for successful implementation.
Responsibilty Centers.pptx
Responsibility centers divide an organization into segments or units for which a manager is responsible for goals and objectives. This allows for decentralized decision making, improved accountability, and motivation of managers. However, responsibility centers can also create conflicts of interest between units and make coordination and cost allocation complex. An effective system balances these benefits with the potential disadvantages.
Responsibility Accounting
Responsibility accounting is a management accounting method where managers are given decision-making authority over a specific department or division and are held responsible for the activities and results within that area. It requires a clearly defined organizational structure divided into responsibility centers such as cost centers (where managers are responsible for incurred costs), revenue centers (responsible for generating revenue), profit centers (responsible for both costs and revenues), and investment centers (responsible for costs, revenues, and return on capital employed). The goals of responsibility accounting are to improve clarity of goals, assist with planning and budgeting, improve quality and cost control, allow for objective evaluation of managers, and decentralize decision-making.
Responsibity centres
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.
Responsibility centers
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.
presentation on responsibility accounting
This document provides an overview of responsibility accounting including its meaning, features, types of responsibility centers, transfer pricing methods, and advantages. Key points:
- Responsibility accounting assigns revenues and costs to those responsible and divides organizations into responsibility centers like cost, profit, and investment centers.
- It uses both planned and actual data, identifies controllable vs. uncontrollable costs, and determines transfer prices for goods exchanged internally.
- Responsibility accounting improves performance, aids cost planning, enables delegation while retaining control, and holds individuals accountable for results.
Responsibility Accounting
responsibility accounting- meaning and definition-objectives- advantages and disadvantages -profit centers
Responsibility accounting
Responsibility accounting is a management control system that delegates authority and responsibility to managers of responsibility centers. It collects planned and actual accounting data on inputs (costs) and outputs (revenues) of responsibility centers. The goals of responsibility accounting are to measure divisional performance, evaluate manager performance, and motivate managers to achieve organizational goals. It enables easy identification of responsible managers and provides relevant and timely information for planning, control, and decision-making. Responsibility centers can be cost centers, which measure only inputs, profit centers, which measure both inputs and outputs, and investment centers. Responsibility accounting reports provide budgeted and actual data in a timely manner to assist managers in identifying variances.
Responsibility accouting
Responsibility accounting is a management system that aims to develop performance measures to evaluate segment managers. It provides the right information to managers at the right time. Responsibility accounting categorizes segments as cost centers, revenue centers, profit centers, or investment centers depending on whether managers are responsible for costs, revenues, profits, or capital invested. Evaluation tools may include cost standards, contribution income statements, or rates of return on invested funds depending on the type of responsibility center.
More Related Content
What's hot
Chapter 10 : Responsible Accounting
Responsibility accounting involves dividing an organization into responsibility centers and assigning costs and revenues to each center. The key types of responsibility centers are cost centers, which managers are responsible for costs, profit centers where managers are responsible for both costs and revenues, and investment centers where managers are responsible for costs, revenues, and capital employed. Effective responsibility accounting requires setting targets for each center, tracking actual performance against targets, reporting variances to management, and taking corrective actions. It aims to evaluate performance and provide feedback to improve future operations.
Features of management accounting
Management accounting selects only the most relevant information from financial accounting data to help management make planning and control decisions. It emphasizes future projections using tools like standard costing, variances, and budgets. Management accounting modifies, analyzes, and interprets financial data to provide management with supporting information for decision-making. It allows flexibility and considers non-financial factors, with the goal of improving efficiency and achieving organizational objectives.
Responsibility centers in MCS
Responsibility centers are organizational units that are accountable for specific activities or functions. There are four main types of responsibility centers: revenue centers focus on sales generation; cost centers control expenses; profit centers influence the bottom line; and investment centers compare profits to assets used. Each responsibility center has defined inputs like funding or resources, and outputs like sales, costs, profits, or returns on investment. Key performance is assessed by the relationship between a center's inputs and outputs.
Management control-system
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.
5. Economic value added (EVA) is calculated as NOPAT minus the capital charge. EVA represents the profit generated above the minimum return required by providers of capital.
So in summary, EVA
Management Control System
This document discusses management control systems and responsibility centers. It defines different types of responsibility centers like cost centers, revenue centers, and profit centers. It also discusses different performance measures used to evaluate responsibility centers like ROI, ROA, and MVA. The document discusses in detail concepts like return on investment, residual income, and economic value added which are used to measure the performance of investment centers. It also talks about transfer pricing and different methods used to determine internal transfer prices between divisions of a company.
Responsibility center mcs ch.4
This document discusses management control systems and responsibility centers. It defines management control as ensuring resources are used efficiently and effectively to accomplish organizational goals. Responsibility centers are organizational units headed by managers responsible for activities and objectives. There are several types of responsibility centers including engineered expense centers, discretionary expense centers, profit centers, and revenue centers. The document outlines the characteristics, budgeting processes, and performance measurement for each type. It also addresses challenges with administrative centers, R&D centers, and discretionary expenses.
Enterprise risk management
This document discusses enterprise risk management (ERM) and a probability risk matrix. ERM aims to identify and prepare for potential dangers that could interfere with organizational objectives. A probability risk matrix is a tool that ranks and prioritizes risks based on their probability and potential impact. It helps determine which risks need detailed response plans by understanding the relative priority of each risk. The presentation goes on to cover risk concepts and classifications before closing.
Presentation4
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.
Balanced scorecard and fund flow statement
The document discusses the Balanced Scorecard, which measures organizational performance across four perspectives: financial, customer, internal processes, and learning and growth. It is used as a tool to improve communication between employees and management and monitor strategic objectives. The Balanced Scorecard measures objectives, measures, targets, and initiatives for each perspective. It aims to increase strategic focus, improve performance through measurements, and enhance communication about strategy and vision.
MCS
A management control system is defined as a set of policies and procedures designed to ensure operations proceed according to plan. It focuses on responsibility centers, each headed by a manager who is accountable for their unit. Managers use planned and actual data to monitor performance, evaluating metrics like budgets, forecasts, and standards. The control process is continuous, like a navigator tracking a ship's course. It covers all company operations and generates integrated information to coordinate activities across the organization. The system emphasizes financial figures to allow comparison across different operational metrics. Reporting occurs at regular intervals so line and staff managers can work together to encourage actions that serve the company's best interests through an interactive yet systematic process.
Bcp task 8
This document outlines the key components and process for developing a business continuity plan (BCP). It discusses the benefits of having a BCP, including keeping businesses operating during incidents and reducing disruption costs. A typical BCP contains sections on governance, business impact analysis, continuity arrangements, readiness procedures, and quality assurance. The process involves developing questionnaires, conducting workshops, validating information, identifying resource needs, and developing recovery strategies, plans, and procedures. It also covers training, testing exercises, and updating the BCP based on lessons learned. When disruptions occur, the response involves incident management, communications, and operations management to continue critical services, followed by recovery and restoration efforts managed through an emergency operations center.
Valuation of good will
This document discusses the valuation of goodwill for businesses. Goodwill valuation is used to determine the remaining value of a company if it is purchased, and takes into account factors like reputation, management efficiency, market situation, and competitive advantages. Goodwill needs to be valued in cases like company amalgamation, takeovers, share conversions, and management changes. Key factors that affect goodwill valuation include historical and expected future profits, capital employed, market share, brand position, technology, and relationships. Common methods to value goodwill are the average profits method, super profits method, and capitalization method. These methods calculate goodwill using figures like average profits over several years, super profits above a normal rate of return, and capitalizing average
Controlling(MARKETING 11)
K12CURRICULUM
Feedforward.Concurrent.Feedback Control.Budgetting. Effective Control Systems. The Importance of control. Areas of control. Elements in an internal Control. Financial Budget; Oraganizational Functions.
Reported by... Grade11 students
Majoycvbhdgkjehf bvnfdyKINDNESS2K16
What's hot (13)
Similar to Responsibility accounting
Responsibility accounting
Responsibility accounting is a system that assigns revenues and costs to responsibility centers based on who has responsibility over that area. It collects both planned and actual accounting information for these centers. Key features include identifying responsibility centers, assigning controllable costs, setting targets, comparing actual to planned performance, and reporting deviations. Responsibility centers can be cost centers, profit centers, or investment centers depending on if they are responsible for costs, revenues, or both. This system aims to improve performance by assigning responsibility and enabling better planning, control, decision-making, and management by exception. However, it requires proper organizational structure and delegation for successful implementation.
Responsibilty Centers.pptx
Responsibility centers divide an organization into segments or units for which a manager is responsible for goals and objectives. This allows for decentralized decision making, improved accountability, and motivation of managers. However, responsibility centers can also create conflicts of interest between units and make coordination and cost allocation complex. An effective system balances these benefits with the potential disadvantages.
Responsibility Accounting
Responsibility accounting is a management accounting method where managers are given decision-making authority over a specific department or division and are held responsible for the activities and results within that area. It requires a clearly defined organizational structure divided into responsibility centers such as cost centers (where managers are responsible for incurred costs), revenue centers (responsible for generating revenue), profit centers (responsible for both costs and revenues), and investment centers (responsible for costs, revenues, and return on capital employed). The goals of responsibility accounting are to improve clarity of goals, assist with planning and budgeting, improve quality and cost control, allow for objective evaluation of managers, and decentralize decision-making.
Responsibity centres
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.
Responsibility centers
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.
presentation on responsibility accounting
This document provides an overview of responsibility accounting including its meaning, features, types of responsibility centers, transfer pricing methods, and advantages. Key points:
- Responsibility accounting assigns revenues and costs to those responsible and divides organizations into responsibility centers like cost, profit, and investment centers.
- It uses both planned and actual data, identifies controllable vs. uncontrollable costs, and determines transfer prices for goods exchanged internally.
- Responsibility accounting improves performance, aids cost planning, enables delegation while retaining control, and holds individuals accountable for results.
Responsibility Accounting
responsibility accounting- meaning and definition-objectives- advantages and disadvantages -profit centers
Responsibility accounting
Responsibility accounting is a management control system that delegates authority and responsibility to managers of responsibility centers. It collects planned and actual accounting data on inputs (costs) and outputs (revenues) of responsibility centers. The goals of responsibility accounting are to measure divisional performance, evaluate manager performance, and motivate managers to achieve organizational goals. It enables easy identification of responsible managers and provides relevant and timely information for planning, control, and decision-making. Responsibility centers can be cost centers, which measure only inputs, profit centers, which measure both inputs and outputs, and investment centers. Responsibility accounting reports provide budgeted and actual data in a timely manner to assist managers in identifying variances.
Responsibility accouting
Responsibility accounting is a management system that aims to develop performance measures to evaluate segment managers. It provides the right information to managers at the right time. Responsibility accounting categorizes segments as cost centers, revenue centers, profit centers, or investment centers depending on whether managers are responsible for costs, revenues, profits, or capital invested. Evaluation tools may include cost standards, contribution income statements, or rates of return on invested funds depending on the type of responsibility center.
Module - BackgroundTRANSFER PRICING AND RESPONSIBILITY CENTERS
Module - Background
TRANSFER PRICING AND RESPONSIBILITY CENTERS
Modular Learning Objectives
Keep the following objectives in mind as you work through the material in this module:
· Define the role of responsibility accounting.
· Differentiate between controllable and uncontrollable costs.
· Analyze structure of a decentralized organization.
· Define profit centers, cost centers, and investment centers.
· Compute transfer prices.
· Identify three main transfer pricing approaches.
Required Reading
This module covers the role of responsibility accounting and responsibility centers. Explore these topics further while keeping the above six objectives in mind. Click on the three arrows to explore each topic in more detail:
The term responsibility accounting refers to an accounting system that collects, summarizes, and reports accounting data relating to the responsibilities of individual managers. A responsibility accounting system provides information to evaluate each manager on the revenue and expense items over which that manager has primary control (authority to influence).
A responsibility accounting report contains those items controllable by the responsible manager. When both controllable and uncontrollable items are included in the report, accountants should clearly separate the categories. The identification of controllable items is a fundamental task in responsibility accounting and reporting.
To implement responsibility accounting in a company, the business entity must be organized so that responsibility is assignable to individual managers. The various company managers and their lines of authority (and the resulting levels of responsibility) should be fully defined. Not all managers have equal authority and responsibility. The degree of a manager’s authority varies from company to company.
The controllability criterion is crucial to the content of performance reports for each manager. For example, at the department supervisor level, perhaps only direct materials and direct labor cost control are appropriate for measuring performance. A plant manager, however, has the authority to make decisions regarding many other costs not controllable at the supervisory level, such as the salaries of department supervisors. These other costs would be included in the performance evaluation of the store manager, not the supervisor.
Watch this short video to further explain the concept of responsibility accounting. https://www.youtube.com/watch?time_continue=1&v=EsS0socI3I4
Decentralization is the dispersion of decision-making authority among individuals at lower levels of the organization. In other words, the extent of decentralization refers to the degree of control that segment managers have over the revenues, expenses, and assets of their segments. When a segment manager has control over these elements, the investment center concept can be applied to the segment. Thus, the more decentralized the decision-making is in an organization the more appli ...
Responsiblity accounting CMA. Vinato Awomi
Responsibility accounting involves accumulating and reporting costs based on individual managers who control decision making. It traces costs to managers responsible for incurring those costs. Responsibility accounting establishes control through decentralized decision making while retaining overall control. It encourages budgeting and comparison to actual results. Managers are accountable to explain variances from budgets. Responsibility centers include cost centers, profit centers, revenue centers, contribution centers, and investment centers. Principles of responsibility accounting include determining responsibility centers, setting targets, comparing actuals to targets, analyzing variances, taking corrective action, offering incentives, excluding uncontrollable costs, and generating responsibility reports. Difficulties can arise from unclear organization structures and responsibilities as well as distinguishing controllable and uncont
RESPONSIBILTY CENTRES for bachelor of business studies
The document discusses responsibility centers and financial control in organizations. It begins by explaining that as organizations grow, there is a need to delegate authority, share responsibility, and divide the organization into segments or divisions. This requires establishing responsibility centers, which are defined as areas of responsibility controlled by individuals. The types of responsibility centers discussed are cost centers, revenue centers, profit centers, and investment centers. The document then covers methods for measuring the performance of responsibility centers, such as return on investment, residual income, and economic value added.
Responsibility Accounting.doc
Notes on Responsibility Accounting ,Management Accounting ,Cost Center,Profit Center, Investment Center.Advantages to the Company .Responsibility accounting is one of the important control systems in large companies. This system comprises of responsibilities, accountability and performance evaluation. It measures the performance of various divisions of an organization.Responsibility accounting is a method of collecting and reporting both budgeted and actual costs and revenue by divisional managers who are responsible for it. Budgeting and standard costing are important part of responsibility accounting.
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.
Responsbility Accounting Transfer Pricing.ppt
This document discusses responsibility accounting and responsibility centers. It defines different types of responsibility centers such as cost centers, revenue centers, profit centers, and investment centers. Cost centers are used to track costs, revenue centers track revenue, profit centers track both costs and revenues, and investment centers evaluate performance based on investments and revenues. The document also covers coordination among responsibility centers, performance measurement, factors that affect performance like coordination, integration, transfer pricing, and management information systems.
Responsible centre.ppt
This document discusses different types of responsible centers in business organizations. It defines a responsible center as an area controlled by an individual manager. There are four main types: 1) Cost centers, where managers are responsible for costs but not revenues. 2) Revenue centers, where managers are responsible for generating sales but not costs. 3) Profit centers, where managers are responsible for both revenues and costs. 4) Investment centers, which are responsible for profits and investments, giving managers more authority over assets. Examples are given for each type to illustrate how performance is evaluated.
Management accounting
The document defines management accounting and discusses its objectives and advantages. It states that management accounting provides economic information to managers to help achieve organizational goals. It covers areas like planning, decision making, and controlling. The objectives of management accounting include planning, interpretation, decision making, controlling, reporting, organizing operations, and facilitating coordination. Responsibility accounting measures inputs and outputs of responsibility centers like cost centers, profit centers, and investment centers. Budgets and budgetary control involve establishing budgets for functions and divisions and comparing actuals to budgets to take corrective actions. Types of budgets include sales, production, purchase, research and capital expenditure budgets.
Chapter 8Responsibility Concepts and Sound Decision-Making Ana.docx
Chapter 8
Responsibility Concepts and Sound Decision-Making Analytics
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.
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 ...
Responsibilitycentersfinal 130122112204-phpapp01
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.
PERFORMANCE EVALUATION DECISIONS.docx
Management Accounting studies the preparation and use of cost accounting information for managerial decision-making and control purposes. This course provides students with the tools needed to understand and address the important problems facing management accountants today. In order to keep up with the class, students should go over the relevant chapters and problems prior to each class. This must then be followed by a more in-depth review of the material and practice of problems after the class.
Similar to Responsibility accounting (20)
Module - BackgroundTRANSFER PRICING AND RESPONSIBILITY CENTERS
Module - BackgroundTRANSFER PRICING AND RESPONSIBILITY CENTERS
RESPONSIBILTY CENTRES for bachelor of business studies
RESPONSIBILTY CENTRES for bachelor of business studies
Chapter 8Responsibility Concepts and Sound Decision-Making Ana.docx
Chapter 8Responsibility Concepts and Sound Decision-Making Ana.docx
Recently uploaded
High-Quality IPTV Monthly Subscription for $15
Experience high-quality entertainment with our IPTV monthly subscription for just $15. Access a vast array of live TV channels, movies, and on-demand shows with crystal-clear streaming. Our reliable service ensures smooth, uninterrupted viewing at an unbeatable price. Perfect for those seeking premium content without breaking the bank. Start streaming today!
https://rb.gy/f409dk
Cover Story - China's Investment Leader - Dr. Alyce SU
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
The Most Inspiring Entrepreneurs to Follow in 2024.pdf
In a world where the potential of youth innovation remains vastly untouched, there emerges a guiding light in the form of Norm Goldstein, the Founder and CEO of EduNetwork Partners. His dedication to this cause has earned him recognition as a Congressional Leadership Award recipient.
1Q24_HYUNDAI CAPITAL SERVICES INC. AND SUBSIDIARIES
1Q24_HYUNDAI CAPITAL SERVICES INC. AND SUBSIDIARIES
NIMA2024 | De toegevoegde waarde van DEI en ESG in campagnes | Nathalie Lam |...
Nathalie zal delen hoe DEI en ESG een fundamentele rol kunnen spelen in je merkstrategie en je de juiste aansluiting kan creëren met je doelgroep. Door middel van voorbeelden en simpele handvatten toont ze hoe dit in jouw organisatie toegepast kan worden.
Kirill Klip GEM Royalty TNR Gold Lithium Presentation
Lithium Will Power Us For The Next 50 Years And Then Robots: Kirill Klip GEM Royalty TNR Gold Lithium Presentation
AI Transformation Playbook: Thinking AI-First for Your Business
I dive into how businesses can stay competitive by integrating AI into their core processes. From identifying the right approach to building collaborative teams and recognizing common pitfalls, this guide has got you covered. AI transformation is a journey, and this playbook is here to help you navigate it successfully.
Unlocking WhatsApp Marketing with HubSpot: Integrating Messaging into Your Ma...
50 million companies worldwide leverage WhatsApp as a key marketing channel. You may have considered adding it to your marketing mix, or probably already driving impressive conversions with WhatsApp.
But wait. What happens when you fully integrate your WhatsApp campaigns with HubSpot?
That's exactly what we explored in this session.
We take a look at everything that you need to know in order to deploy effective WhatsApp marketing strategies, and integrate it with your buyer journey in HubSpot. From technical requirements to innovative campaign strategies, to advanced campaign reporting - we discuss all that and more, to leverage WhatsApp for maximum impact. Check out more details about the event here https://events.hubspot.com/events/details/hubspot-new-delhi-presents-unlocking-whatsapp-marketing-with-hubspot-integrating-messaging-into-your-marketing-strategy/
The latest Heat Pump Manual from Newentide
𝐔𝐧𝐯𝐞𝐢𝐥 𝐭𝐡𝐞 𝐅𝐮𝐭𝐮𝐫𝐞 𝐨𝐟 𝐄𝐧𝐞𝐫𝐠𝐲 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲 𝐰𝐢𝐭𝐡 𝐍𝐄𝐖𝐍𝐓𝐈𝐃𝐄’𝐬 𝐋𝐚𝐭𝐞𝐬𝐭 𝐎𝐟𝐟𝐞𝐫𝐢𝐧𝐠𝐬
Explore the details in our newly released product manual, which showcases NEWNTIDE's advanced heat pump technologies. Delve into our energy-efficient and eco-friendly solutions tailored for diverse global markets.
PM Surya Ghar Muft Bijli Yojana: Online Application, Eligibility, Subsidies &...
PM Surya Ghar Muft Bijli Yojana: Online Application, Eligibility, Subsidies &...Ksquare Energy Pvt. Ltd.
During the budget session of 2024-25, the finance minister, Nirmala Sitharaman, introduced the “solar Rooftop scheme,” also known as “PM Surya Ghar Muft Bijli Yojana.” It is a subsidy offered to those who wish to put up solar panels in their homes using domestic power systems. Additionally, adopting photovoltaic technology at home allows you to lower your monthly electricity expenses. Today in this blog we will talk all about what is the PM Surya Ghar Muft Bijli Yojana. How does it work? Who is eligible for this yojana and all the other things related to this scheme?Dpboss Matka Guessing Satta Matta Matka Kalyan panel Chart Indian Matka Dpbos...
Dpboss Matka Guessing Satta Matta Matka Kalyan panel Chart Indian Matka Dpbos...➒➌➎➏➑➐➋➑➐➐Dpboss Matka Guessing Satta Matka Kalyan Chart Indian Matka
Sattamatka.satta.matka.satta matka.kalyan weekly chart.kalyan chart.kalyan jodi chart.kalyan penal chart.kalyan today.kalyan open.fix satta.fix fix fix Satta matka nambar8328958814KALYAN MATKA | MATKA RESULT | KALYAN
8328958814KALYAN MATKA | MATKA RESULT | KALYAN KALYAN MATKA | MATKA RESULT | KALYAN MATKA TIPS | SATTA MATKA | MATKA.COM | MATKA PANA
Satta Matka Dpboss Kalyan Matka Results Kalyan Chart
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART INDIA MATKA KALYAN SATTA MATKA 420 INDIAN MATKA SATTA KING MATKA FIX JODI FIX FIX FIX SATTA NAMBAR MATKA INDIA SATTA BATTA
2024.06 CPMN Cambridge - Beyond Now-Next-Later.pdf
Slides presented by Phil Hornby, Founder and Director of "for product people", at Cambridge Product Management Network, on Monday 17th June 2024.
Prescriptive analytics BA4206 Anna University PPT
Business analysis - Prescriptive analytics Introduction to Prescriptive analytics
Prescriptive Modeling
Non Linear Optimization
Demonstrating Business Performance Improvement
Satta Matka Dpboss Kalyan Matka Results Kalyan Chart
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
Recently uploaded (20)
Cover Story - China's Investment Leader - Dr. Alyce SU
Cover Story - China's Investment Leader - Dr. Alyce SU
The Most Inspiring Entrepreneurs to Follow in 2024.pdf
The Most Inspiring Entrepreneurs to Follow in 2024.pdf
1Q24_HYUNDAI CAPITAL SERVICES INC. AND SUBSIDIARIES
1Q24_HYUNDAI CAPITAL SERVICES INC. AND SUBSIDIARIES
NIMA2024 | De toegevoegde waarde van DEI en ESG in campagnes | Nathalie Lam |...
NIMA2024 | De toegevoegde waarde van DEI en ESG in campagnes | Nathalie Lam |...
Kirill Klip GEM Royalty TNR Gold Lithium Presentation
Kirill Klip GEM Royalty TNR Gold Lithium Presentation
AI Transformation Playbook: Thinking AI-First for Your Business
AI Transformation Playbook: Thinking AI-First for Your Business
Unlocking WhatsApp Marketing with HubSpot: Integrating Messaging into Your Ma...
Unlocking WhatsApp Marketing with HubSpot: Integrating Messaging into Your Ma...
Registered-Establishment-List-in-Uttarakhand-pdf.pdf
Registered-Establishment-List-in-Uttarakhand-pdf.pdf
PM Surya Ghar Muft Bijli Yojana: Online Application, Eligibility, Subsidies &...
PM Surya Ghar Muft Bijli Yojana: Online Application, Eligibility, Subsidies &...
Dpboss Matka Guessing Satta Matta Matka Kalyan panel Chart Indian Matka Dpbos...
Dpboss Matka Guessing Satta Matta Matka Kalyan panel Chart Indian Matka Dpbos...
Satta Matka Dpboss Kalyan Matka Results Kalyan Chart
Satta Matka Dpboss Kalyan Matka Results Kalyan Chart
2024.06 CPMN Cambridge - Beyond Now-Next-Later.pdf
2024.06 CPMN Cambridge - Beyond Now-Next-Later.pdf
Satta Matka Dpboss Kalyan Matka Results Kalyan Chart
Satta Matka Dpboss Kalyan Matka Results Kalyan Chart
Responsibility accounting
- 3. Responsibility accounting is a system of control where responsibility is assigned for the control of costs. The persons are made responsible for the control of costs. Proper authority is given to the persons so that they are able to keep up their performance. In case the performance is not according to the predetermined standards then the person who are assigned this duty will be personally responsible for it. In responsibility accounting the emphasis is on men rather than on systems. MEANING OF RESPONSIBILITY ACCOUNTING
- 4. Large complex Businesses are divided into responsibility centers enabling managers to have a smaller effective span of control. RESPONSIBILITY CENTERS
- 5. The responsibility is the unit in the organization that has control over costs, revenues or investment funds. It is an organization unit for which a manager is made responsible The center’s manager and supervisor establish specific and measurable goals for the responsibility centers The goals should promote the long term interest of the organization. WHAT IS A RESPONSIBILITY CENTERS.
- 6. The accounting System provides information about resources used and outputs achieved. This information is used to: Plan and allocate resources. Control operations. Evaluate the performance of centers managers. THE NEED FOR INFORMATION ABOUT RESPONSIBILITY CENTER PERFORMANCE
- 7. There are four basic types of responsibility centers. These centers indicates the degree of responsibility the manager has for the performance of the center. Cost or Expenses center Profit Center Revenue Center Investment Center TYPES OD RESPONSIBILITY CENTERS Cost Center Revenue Center Investment Center Profit Center
- 8. Cost Centers: A business section that has responsibility for controlling costs, but no control over revenues. Example: Production Department in a manufacturing unit, a dry cleaning business 1. EXPENSES/ COST CENTERS
- 9. A profit center is a subunit that has responsibility of generating revenue and controlling costs. Can be a business division or any of the functional unit 2. PROFIT CENTER
- 10. A revenue Center is responsible for selling an agreed amount of products or services. It’s manager is usually responsible to maximize revenue given the selling price (or quantity) and given the budget for personnel and expenses. 3.REVENUE CENTER
- 11. An investment center is a responsibility center in which the manager is responsible for the use of assets as well as for profit. It satisfies goals of business organization i.e. To earn the profit. 4. INVESTMENT CENTERS Corporate Headquarters
- 12. Examples