Week 7: Responsibility Centers
Compare and contrast the three types of responsibility centers. What is the best way to evaluate a manager’s performance in each type of center? What is the problem with using only financial measures of performance?
Additional Questions for Week #7:
- Responsibility Accounting
- Why is there an inherent conflict between the planning and control uses of budgets?
- “Accounting plays a relatively unimportant role in budgeting.” Do you agree? Explain your answer.
- How would performance be evaluated if there were no budgets?
- Relevant Costs
- ABC Company has a product line that is unprofitable. What circumstances may cause overall company net income to decrease if the unprofitable segment is eliminated?
- Explain the meaning of sunk costs and opportunity costs and their roles in the decision-making process.
- Why is the relative sales value a more logical basis for allocating joint costs than physical quantity?