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NNF1024 NNF1024
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When a small business begins, it is generally simple for the owner or manager to stay on top of everything going on in the business. However, as the business adds more product lines and locations. and hires more employees, it becomes more and more difficult for top management to remain informed about the company's activities.

Required:

a.What is decentralization?
b.What are four advantages of decentralization?
c.Identify and describe the three organizational centers of responsibility under a unit
manager's control.
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Managerial Accounting

Managerial Accounting


Edition: 4th
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browntown345browntown345
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a.Decentralization is an organizational structure in which decision-making authority is
dispersed throughout the organization rather than having decision-making authority for the entire organization in the hands of one person or a small group of people in a single location.
b.Four advantages of decentralization are
•Yields better information for operational decision making
•Yields more timely information for operational decision making
•Develops decision-making skills of next generation of top managers
•Allows top managers to focus on strategic planning and decision making
c.The three responsibility centers are:
•Cost center — an organizational unit whose manager is responsible only
​for the costs incurred in the unit. The goal of the cost center manager
​is to minimize total
​costs while providing an acceptable level of service or quality of product.
​Their managers' performance is measured largely by comparing the actual costs
​incurred to the flexible budget.
•Profit center — an organizational unit whose manager is responsible
​for both the revenue and costs incurred in generating a product or service.
​Though this unit is expected generate a profit, not just revenues or costs,
​the manager cannot commit funds to invest in assets. The manager's
​performance is typically measured based on the unit's overall profit
​compared to the flexible budget.
•Investment center — an organizational unit that is expected to invest
​in assets that generate profits. Investment center managers have the
​broadest responsibility of the three types of managers. Though their
​performance could be evaluated using the same methods as for cost
​and profit center managers, most organizations use measures such as
​ROI and residual income.


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NNF1024 Author
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A month ago
Smart ... Thanks!
kiara23247843
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Yesterday
Thank you, thank you, thank you!
shangshang
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2 hours ago
Good timing, thanks!
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