- Responsibility accounting is a system that assigns responsibility for controlling costs to individuals within an organization. It focuses on evaluating managers based on the costs and revenues they can control.
- Key features include identifying responsibility centers where authority is delegated, assigning controllable and uncontrollable costs and revenues to these centers, and preparing responsibility reports to provide feedback on variances from budgets.
- The goal is not to punish individuals but rather to motivate improved performance by providing information to managers on areas where they can influence outcomes.
Responsibility accounting is a system of dividing an organization into similar units, each of which is to be assigned particular responsibilities. These units may be in the form of divisions, segments, departments, branches, product lines and so on. Each department is comprised of individuals who are responsible for particular tasks or managerial functions. The managers of various departments should ensure that the people in their department are doing well to achieve the goal. Responsibility accounting refers to the various concepts and tools used by managerial accountants to measure the performance of people and departments in order to ensure that the achievement of the goals set by the top management.
Responsibility accounting, therefore, represents a method of measuring the performances of various divisions of an organization. The test to identify the division is that the operating performance is separately identifiable and measurable in some way that is of practical significance to the management. Responsibility accounting collects and reports planned and actual accounting information about the inputs and outputs of responsibility centers.
Under this technique all costs are classified into fixed costs and variable costs. Only variable costs are considered product costs and are allocated to products manufactured. These costs include direct materials, direct labor, direct expenses and variable overhead. Fixed costs are not considered for computing the cost of products or valuation of inventory.
This presentation is made by Toran Lal Verma. Meaning, nature, and scope of Financial Management are discussed. scope and objectives of financial management have been discussed along with merits and demerits.
Responsibility accounting is a system of dividing an organization into similar units, each of which is to be assigned particular responsibilities. These units may be in the form of divisions, segments, departments, branches, product lines and so on. Each department is comprised of individuals who are responsible for particular tasks or managerial functions. The managers of various departments should ensure that the people in their department are doing well to achieve the goal. Responsibility accounting refers to the various concepts and tools used by managerial accountants to measure the performance of people and departments in order to ensure that the achievement of the goals set by the top management.
Responsibility accounting, therefore, represents a method of measuring the performances of various divisions of an organization. The test to identify the division is that the operating performance is separately identifiable and measurable in some way that is of practical significance to the management. Responsibility accounting collects and reports planned and actual accounting information about the inputs and outputs of responsibility centers.
Under this technique all costs are classified into fixed costs and variable costs. Only variable costs are considered product costs and are allocated to products manufactured. These costs include direct materials, direct labor, direct expenses and variable overhead. Fixed costs are not considered for computing the cost of products or valuation of inventory.
This presentation is made by Toran Lal Verma. Meaning, nature, and scope of Financial Management are discussed. scope and objectives of financial management have been discussed along with merits and demerits.
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
Cost Accounting-
-Meaning of Cost Accounting
-Scope of Cost Accounting
-Nature of Cost Accounting
-Relationship b/w Financial Accounting & Cost Accounting
-Cost Accounting v/s Management Accounting
-Objectives of cost accounting
-Function of cost accountant
-Essentials of cost accounting
-Advantages of cost accounting
-Limitations of cost accounting
-Role of cost in cost accounting
-Cost Unit & Cost Centre
-Cost Techniques
-Costing Systems
-Costing Methods
-Cost Classification
-Components of total cost
-Cost Sheet.
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
Cost Accounting-
-Meaning of Cost Accounting
-Scope of Cost Accounting
-Nature of Cost Accounting
-Relationship b/w Financial Accounting & Cost Accounting
-Cost Accounting v/s Management Accounting
-Objectives of cost accounting
-Function of cost accountant
-Essentials of cost accounting
-Advantages of cost accounting
-Limitations of cost accounting
-Role of cost in cost accounting
-Cost Unit & Cost Centre
-Cost Techniques
-Costing Systems
-Costing Methods
-Cost Classification
-Components of total cost
-Cost Sheet.
1. Responsibility accounting in modern health care organization is.docxjackiewalcutt
1. Responsibility accounting in modern health care organization is a type of management accounting which collects and reports both planned and actual accounting information in terms of responsibility centers about the inputs and outputs of responsibility accounting.
A growing trend in the structure of health care organizations is decentralization.
Decentralization is the degree of dispersion of responsibility within a health care organization. In a decentralized organization, decision making is not confined to a few Top Executives but rather spread throughout the organization, with managers at various levels making key operating decisions within their sphere of responsibility.
Health care organizations are divided into responsibility centers, organizational units in which a manager is responsible for operations and evaluates the unit's performance. For example, a nurse manager may be responsible for an inpatient pediatric unit, the manager for a home-care program is responsible for all home-care services that are delivered, and the manager of a housekeeping department is responsible for the cleanliness of the facility. Every program and department in a health care organization can be classified as a responsibility center.
Responsibility accounting provides the information necessary to assist a manager in operating a responsibility center. Responsibility accounting is defined as the classification of financial and statistical data according to the organizational unit that produces the revenue and incurs the expense. There are four major types of responsibility center and cost centers is one.
Cost centers are responsible for providing services and controlling their costs. The types of costs center in health care organizations are production, clinical and administrative cost centers. The production cost centers develop and/or cell products, such as laboratories. Clinical cost centers are responsible for providing health care related services to patients or clients, such as pharmacy, radiology (if services are covered), laboratory (same as radiology) and dietary services, and various nursing units. Administrative cost centers support the clinical cost centers and the organization as a whole. For example the housekeeping department, because it incurs costs, but does not generate revenue.
Within every organization today there is at least one responsibility center that helps the organization function and managers are held accountable for the performance of their responsibility centers. Responsibility refers to the tasks and obligations of a responsibility center; authority is the influence to carry out a given responsibility; and accountability means there are consequences for carrying out responsibilities.
Budget variances are the most universal measure for financial performance. A budget variance is a discrepancy between the predicted cost or revenue in a given account. It’s common for health care organizations to separate their total budge ...
Expenses and business activities go hand in hand. In order to ensure that the project or task is beneficial, the organization should incur cost of acquisition.Some of the most crucial expense management best practices that benefit an organization and show visible positive changes.
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.
Public Speaking Tips to Help You Be A Strong Leader.pdfPinta Partners
In the realm of effective leadership, a multitude of skills come into play, but one stands out as both crucial and challenging: public speaking.
Public speaking transcends mere eloquence; it serves as the medium through which leaders articulate their vision, inspire action, and foster engagement. For leaders, refining public speaking skills is essential, elevating their ability to influence, persuade, and lead with resolute conviction. Here are some key tips to consider: https://joellandau.com/the-public-speaking-tips-to-help-you-be-a-stronger-leader/
Integrity in leadership builds trust by ensuring consistency between words an...Ram V Chary
Integrity in leadership builds trust by ensuring consistency between words and actions, making leaders reliable and credible. It also ensures ethical decision-making, which fosters a positive organizational culture and promotes long-term success. #RamVChary
A presentation on mastering key management concepts across projects, products, programs, and portfolios. Whether you're an aspiring manager or looking to enhance your skills, this session will provide you with the knowledge and tools to succeed in various management roles. Learn about the distinct lifecycles, methodologies, and essential skillsets needed to thrive in today's dynamic business environment.
12 steps to transform your organization into the agile org you deservePierre E. NEIS
During an organizational transformation, the shift is from the previous state to an improved one. In the realm of agility, I emphasize the significance of identifying polarities. This approach helps establish a clear understanding of your objectives. I have outlined 12 incremental actions to delineate your organizational strategy.
The case study discusses the potential of drone delivery and the challenges that need to be addressed before it becomes widespread.
Key takeaways:
Drone delivery is in its early stages: Amazon's trial in the UK demonstrates the potential for faster deliveries, but it's still limited by regulations and technology.
Regulations are a major hurdle: Safety concerns around drone collisions with airplanes and people have led to restrictions on flight height and location.
Other challenges exist: Who will use drone delivery the most? Is it cost-effective compared to traditional delivery trucks?
Discussion questions:
Managerial challenges: Integrating drones requires planning for new infrastructure, training staff, and navigating regulations. There are also marketing and recruitment considerations specific to this technology.
External forces vary by country: Regulations, consumer acceptance, and infrastructure all differ between countries.
Demographics matter: Younger generations might be more receptive to drone delivery, while older populations might have concerns.
Stakeholders for Amazon: Customers, regulators, aviation authorities, and competitors are all stakeholders. Regulators likely hold the greatest influence as they determine the feasibility of drone delivery.
Enriching engagement with ethical review processesstrikingabalance
New ethics review processes at the University of Bath. Presented at the 8th World Conference on Research Integrity by Filipa Vance, Head of Research Governance and Compliance at the University of Bath. June 2024, Athens
Employment PracticesRegulation and Multinational CorporationsRoopaTemkar
Employment PracticesRegulation and Multinational Corporations
Strategic decision making within MNCs constrained or determined by the implementation of laws and codes of practice and by pressure from political actors. Managers in MNCs have to make choices that are shaped by gvmt. intervention and the local economy.
Org Design is a core skill to be mastered by management for any successful org change.
Org Topologies™ in its essence is a two-dimensional space with 16 distinctive boxes - atomic organizational archetypes. That space helps you to plot your current operating model by positioning individuals, departments, and teams on the map. This will give a profound understanding of the performance of your value-creating organizational ecosystem.
Comparing Stability and Sustainability in Agile SystemsRob Healy
Copy of the presentation given at XP2024 based on a research paper.
In this paper we explain wat overwork is and the physical and mental health risks associated with it.
We then explore how overwork relates to system stability and inventory.
Finally there is a call to action for Team Leads / Scrum Masters / Managers to measure and monitor excess work for individual teams.
Senior Project and Engineering Leader Jim Smith.pdfJim Smith
I am a Project and Engineering Leader with extensive experience as a Business Operations Leader, Technical Project Manager, Engineering Manager and Operations Experience for Domestic and International companies such as Electrolux, Carrier, and Deutz. I have developed new products using Stage Gate development/MS Project/JIRA, for the pro-duction of Medical Equipment, Large Commercial Refrigeration Systems, Appliances, HVAC, and Diesel engines.
My experience includes:
Managed customized engineered refrigeration system projects with high voltage power panels from quote to ship, coordinating actions between electrical engineering, mechanical design and application engineering, purchasing, production, test, quality assurance and field installation. Managed projects $25k to $1M per project; 4-8 per month. (Hussmann refrigeration)
Successfully developed the $15-20M yearly corporate capital strategy for manufacturing, with the Executive Team and key stakeholders. Created project scope and specifications, business case, ROI, managed project plans with key personnel for nine consumer product manufacturing and distribution sites; to support the company’s strategic sales plan.
Over 15 years of experience managing and developing cost improvement projects with key Stakeholders, site Manufacturing Engineers, Mechanical Engineers, Maintenance, and facility support personnel to optimize pro-duction operations, safety, EHS, and new product development. (BioLab, Deutz, Caire)
Experience working as a Technical Manager developing new products with chemical engineers and packaging engineers to enhance and reduce the cost of retail products. I have led the activities of multiple engineering groups with diverse backgrounds.
Great experience managing the product development of products which utilize complex electrical controls, high voltage power panels, product testing, and commissioning.
Created project scope, business case, ROI for multiple capital projects to support electrotechnical assembly and CPG goods. Identified project cost, risk, success criteria, and performed equipment qualifications. (Carrier, Electrolux, Biolab, Price, Hussmann)
Created detailed projects plans using MS Project, Gant charts in excel, and updated new product development in Jira for stakeholders and project team members including critical path.
Great knowledge of ISO9001, NFPA, OSHA regulations.
User level knowledge of MRP/SAP, MS Project, Powerpoint, Visio, Mastercontrol, JIRA, Power BI and Tableau.
I appreciate your consideration, and look forward to discussing this role with you, and how I can lead your company’s growth and profitability. I can be contacted via LinkedIn via phone or E Mail.
Jim Smith
678-993-7195
jimsmith30024@gmail.com
Specific ServPoints should be tailored for restaurants in all food service segments. Your ServPoints should be the centerpiece of brand delivery training (guest service) and align with your brand position and marketing initiatives, especially in high-labor-cost conditions.
408-784-7371
Foodservice Consulting + Design
2. The systems of costing like standard costing and
budgetary control are useful to management for
controlling the costs. In those systems the emphasis is
on the devices of control and not on those who use such
devices. 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 persons who are assigned this duty
will be personally responsible for it. In responsibility
accounting the emphasis is on men rather than on
systems.
3. An Accounting system that provides
information…..
Relating to the
responsibilities of the
individual managers
To evaluate managers
on controllable items
4. “ is the maintaining of accounts in
such a way that the performance and level of achievement of various
persons responsible for different works is studied.”
“ is a system of management
accounting under which accountability is established according to
the responsibility delegated to various levels of management and a
management information and reporting system instituted to give
adequate feedback in terms of the delegated responsibility. Under
this system divisions or units of an organization under a specified
authority in a person are developed as responsibility centres and
evaluated individually for their performance.”
5. An analysis of the definitions given above reveals the following important features
or fundamental aspects of responsibility accounting:
The implementation and maintenance of responsibility accounting system is based
upon information relating to inputs and outputs. The physical resources utilized in an
organization; such as quantity of raw material used and labour hours consumed, are
termed as inputs. These inputs expressed in the monetary terms are known as costs.
Similarly outputs expressed in monetary terms are called revenues. Thus,
responsibility accounting is based on cost and revenue information.
Effective responsibility accounting requires both planned and actual financial
information. It is not only the historical cost and revenue data but also the planned
future data which is essential for the implementation of responsibility accounting
system. It is through budgets that responsibility for implementing the plans is
communicated to each level of management. The use of fixed budgets, flexible
budgets and profit planning are all incorporated into one overall system of
responsibility accounting.
6. The whole concept of responsibility accounting is focused around identification
of responsibility centres. The responsibility centres represent the sphere of
authority or decision points in an organization. In a small firm, one individual or
a small group of individuals, who are usually the owners may possibly manage
or control the entire organization.
However, for effective control, a large firm is, usually, divided into meaningful
segments, departments or divisions. These sub- units or divisions of organisation
are called responsibility centres. A responsibility centre is under the control of an
individual who is responsible for the control of activities of that sub-unit of the
organisation.
This responsibility centre may be a very small sub-unit of the organisation, as an
individual could be made responsible for one machine used in manufacturing
operations, or it may be very big division of the organisation, such as a
divisional manager could be responsible for achieving a certain level of profit
from the division and investment under his control. However, the general
guideline is that “the unit of the organisation should be separable and
identifiable for operating purposes and its performance measurement possible”
7.
8. A sound organisation structures with clear-cut lines of authority—responsibility
relationships are a prerequisite for establishing a successful responsibility
accounting system. Further, responsibility accounting system must be so designed
as to suit the organisation structure of the organisation. It must be founded upon
the existing authority- responsibility relationships in the organisation. In fact,
responsibility accounting system should parallel the organisation structure and
provide financial information to evaluate actual results of each individual
responsible for a function.
After identifying responsibility centres and establishing authority-responsibility
relationships, responsibility accounting system involves assigning of costs and
revenues to individuals. Only those costs and revenues over which an individual
has a definite control can be assigned to him for evaluating his performance.
Responsibility accounting has an appeal because it distinguishes between
controllable and uncontrollable costs. Unlike traditional accounting where costs
are classified and accumulated according to function such as manufacturing cost
or selling and distribution cost, etc. or according to products, responsibility
accounting classifies accumulated costs according to controllability.
9. ‘Controllable costs’ are those costs which can be controlled or influenced by a
specified person or a level of management of an undertaking. Costs which
cannot be so controlled or influenced by the action of a specified individual of an
undertaking are known as ‘uncontrollable costs’. The difference in controllable
and uncontrollable costs may only be in relation to a particular person or level of
management.
The following guidelines recommended by the Committee of the
American Accounting Association in regard to assigning of costs may
be followed:
(a) If the person has authority over both the acquisition and use of the services,
he should be charged with the cost of these services.
(b) If the person can significantly influence the amount of cost through his own
action, he may be charged with such costs.
(c) Even if the person cannot significantly influence the amount of cost through
his own direct action, he may be charged with those elements with which the
management desires him to be concerned, so that he will help to influence those
who are responsible.
10. In a large scale enterprise having decentralized divisions, there is a common practice
of transferring goods and services from one segment of the organisation to another. In
such situations, there is a need to determine the price at which the transfer should
take place so that costs and revenues could be properly assigned.
The significance of the transfer price can well be judged from the fact that for the
transferring division it will be a source of revenue, whereas for the division to which
transfer is made it will be an element of cost. Thus, there is a need of having a proper
transfer policy for the successful implementation of responsibility accounting system.
There are various transfer pricing methods in use, such as cost price, cost plus normal
profit, incremental cost basis, negotiated price, standard price, etc. These methods of
intra-company transfers have been discussed in detail later in this chapter.
As stated earlier, responsibility account is a control device. A control system to be
effective should be such that deviations from the plans must be reported at the earliest
so as to take corrective action for the future. The deviations can be known only when
performance is reported.
Thus, responsibility accounting system is focused on performance reports also known
as ‘responsibility reports’, prepared for each responsibility unit. Unlike authority
which flows from top to bottom, reporting flows from bottom to top. These reports
should be addressed to appropriate persons in respective responsibility centres.
11. The reports should contain information in comparative form as to show plans
(budgets) and the actual performance and should give details of variances which are
related to that centre. The variances which are not controllable at a particular
responsibility centre should also be mentioned separately in the report. To be
effective, the reports should be clear and simple. Use of diagrams, charts,
illustrations, graphs and tables may be made to make them attractive and easily
understandable.
A specimen of a performance report is given below:
12. The function of responsibility accounting system becomes more effective if
participative or democratic style of management is followed, wherein, the plans
are laid or budgets/ standards are fixed according to the mutual consent and the
decisions reached after consulting the subordinates. It provides motivation to the
workers by ensuring their participation and self imposed goals.
It is a well accepted fact that at successive higher levels of management in the
organizational chain less and less time is devoted to control and more and more
to planning. Thus, an effective responsibility accounting system must provide
for management by exception, i.e., it should focus attention of the management
on significant deviations and not burden them with all kinds of routine matters,
rather condensed reports requiring their attention must be sent to them
particularly at higher levels of management.
13. The following diagram explains the flow and reporting details at
different levels of management:
14. ‘The aim of responsibility accounting is not to place blame. Instead it
is to evaluate the performance and provide feedback so that future
operations can be improved’. Goals and objectives are achieved
through people and, hence, responsibility accounting system should
motivate people. It should be used in positive sense. It should not be
taken as a device to punish subordinates.
It should rather help in improving their performance. Subordinates
sometimes dislike control because they take them as restraints. The
best responsibility accounting system enlightens employees about the
positive side of control. To ensure the success of responsibility
accounting system, it must look into the human aspect also by
considering needs of subordinates, developing mutual interests,
providing information about control measures and adjusting
according to requirements.