ACCT1022 Chapter Notes - Chapter 13: Internal Control, Imperfect Competition, Opportunity Cost

• School: Boston College
• Department: Accounting
• Course: ACCT1022
• Professor: Ewa Sletten

Document Summary

Transfer price: the price at which products or services are transferred between two subunits in an organization. Investment centers: largest subunits within these and similar organizations. Goal congruence: obtained when the managers of subunits throughout an organization strive to achieve the goals set by top management: difficult to achieve. Managers are unaware of the effects of their decisions on the organization"s other subunits. People are more concerned with their own subunits rather than other ones: managerial accountants objective is to provide these incentives to the organization"s subunit manager. The key factor in deciding how well the responsibility accounting system workers is the extent to which it directs managers" efforts toward organizational goals. Management by objectives: managers participate in setting goals that they then strive to achieve. As an organization grows, managers need more formal information systems. Normally adapt and become more complex as information gets more abundant and hard to control.