MGMT 122 Chapter Notes - Chapter 11: Accounts Receivable, Performance Measurement, Profit Center
Document Summary
In a decentralized organization, decision making authority is spread throughout the organization rather than being confined to a few top executives. Organizations do differ in the extent to which they are decentralized. Decentralized organizations need responsibility accounting systems that link lower level managers" decision making authority with accountability for the outcomes of those decisions. Responsibility center is used for any part of an organization whose manager has control over and is accountable for cost, profit, or investments. The three primary types of responsibility centers: 1. Cost center: the manager of a cost center has control over costs but not over revenue or the use of investment funds. Service departments like accounting, finance, general administration, legal, and personnel are usually classified as cost centers: 2. Profit center: the manager of a profit center has control over both costs and revenue but not over the use of investment funds: 3.
