BUS 424 Chapter Notes - Chapter 7: Profit Sharing, Variable Cost, Fixed Cost
Financial responsibility centers: the apportioning of accountability for financial results within the organization, the (cid:373)a(cid:374)ager"s respo(cid:374)si(cid:271)ilities are defi(cid:374)ed at least partially in financial terms, type of responsibility centers. Organization unit headed by a manager with responsibility for a particular set of inputs and/or outputs. Formal management processes: planning and budgeting, to define performance expectations and standards for evaluating performance. Motivational contracts: to define the links between the results and various organizational incentives. Managers are held accountable for generating revenues (a financial measure of outputs: sales department in commercial organizations, fundraising managers in not-for-profit organizations. No formal attempt is made to relate inputs (expenses) to outputs: however, most revenue center managers are also held accountable for some expenses (salespeople"s salaries and commissions, not profit centers because. The costs are insignificant compared to the revenues generated. Revenues centers are not charged for the costs of the goods they sell.