Responsibility Accounting Flashcards
In responsibility accounting, managers
are held accountable for controllable factors across their areas of responsibility
What are the areas of responsibility
cost center
profit center
and investment centers
Characteristics of Cost center and who is responsible
do not generate revenue
example - billing department
cost center managers are accountable
Characteristics of Profit center and who is responsible
generates revenues and costs
Example - retail store / sales office
profit center manager are accountable
Characteristics of Investment center and who is responsible
a division or manufacturing segment of a company
Investment Manager would be held accountable
List of things in investment capital
revenues, costs, and investment of capital, possibly using a financial metric such as return on invested capital
Production line managers have the most control over
Material usage variance
Labor efficiency variance
Overhead efficiency variance
all are efficiency of resources used
Purchasing Manager has the most control over
Price of Raw Materials Used
What managers are responsible for the profits of a company
Profit Managers and Investment managers
