Decentralized businesses can have three responsibility centers that must be evaluated differently because of their functions....

Decentralized businesses can have three responsibility centers that must be evaluated differently because of their functions.

Describe the three responsibility centers and give an example of each from your work.
Give an explanation about how each is evaluated.
Tell us why you would prefer to work in a centralized or decentralized organization.
Discuss which type of responsibility center you would prefer to manage and why.

Solutions

Expert Solution

Decentralization is the division of an entire company into smaller, more manageable units. These units achieve some form of autonomy as these are managed by people from their own departments. In a decentralized organization, the lower level managers are given the authority to make operating decisions. The day-to-day operations of these units are left to lower level managers. Such a system frees top management from dealing with minor details. This allows them to focus on important management functions like strategic planning, dealing with major customers and suppliers, making investment and financial decisions, etc.

An advantage of decentralization is better decision-making. This presupposes that lower level managers possess more knowledge and experience as to how their departments operate. They are more acquainted with the common problems faced by their departments. Hence, they make better, more timely decisions. Further, this sense of autonomy empowers lower level managers and motivates them to contribute more to the organization's overall goals.

A potential problem associated with decentralization is management losing control over the company's operations. Lower level managers who are given power may mismanage or abuse their authority.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Which of the following statements about responsibility centers is FALSE? 1. Responsibility centers usually have one...

Which of the following statements about responsibility centers is FALSE? 1. Responsibility centers usually have one goal. 2. Management control systems monitor responsibility center goals. 3. Responsibility centers are usually classified according to their managers' primary financial responsibility. 4. Cost centers, profit centers and investment centers are all examples of responsibility centers.

Are profitable ethical businesses profitable because they are ethical, or are they ethical because it can...

Are profitable ethical businesses profitable because they are ethical, or are they ethical because it can lead to profits? Consider companies such as Ben & Jerry’s, Body Shop, and Timberland in your answer.

1. Cost, profit, and investment centers can all be classified as responsibility centers.T or F 2....

1. Cost, profit, and investment centers can all be classified as responsibility centers.T or F 2. Management decisions often include both financial and nonfinancial information. T or F 3. The total direct labor hours used for the direct labor budget comes from the: a.sales forecast. b.production budget. c. direct materials budget. d.sales budget. 4. Budgeting allows a service firm to a.hire professional staff to perform the budgeting work. b.coordinate professional staff needs with anticipated services. c.classify all personnel as either...

How can/should responsibility center managers department decision making performance be properly evaluated. Also, as it relates...

How can/should responsibility center managers department decision making performance be properly evaluated. Also, as it relates to variance analysis, standard costs, cost volume profit analysis, and efficiency, discuss the impact that company bonuses can/should have on responsibility center managers decision process.

Profit Center Responsibility Reporting A-One Freight Inc. has three regional divisions organized as profit centers. The...

Profit Center Responsibility Reporting A-One Freight Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31, 20Y3. Revenues—Air Division $ 1,290,700 Revenues—Rail Division 1,562,500 Revenues—Truck Division 2,729,100 Operating Expenses—Air Division 817,900 Operating Expenses—Rail Division 929,900 Operating Expenses—Truck Division 1,650,400 Corporate Expenses—Shareholder Relations 196,300 Corporate Expenses—Customer Support 665,000 Corporate...

Profit Center Responsibility Reporting A-One Freight Inc. has three regional divisions organized as profit centers. The...

Profit Center Responsibility Reporting A-One Freight Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31, 20Y3. Revenues—Air Division $ 1,104,600 Revenues—Rail Division 1,295,000 Revenues—Truck Division 2,401,200 Operating Expenses—Air Division 700,000 Operating Expenses—Rail Division 770,700 Operating Expenses—Truck Division 1,452,100 Corporate Expenses—Shareholder Relations 168,000 Corporate Expenses—Customer Support 613,800 Corporate...

As you learned in Chapter 4, corporate social responsibility is the concern businesses have for society....

As you learned in Chapter 4, corporate social responsibility is the concern businesses have for society. As you are aware, not everyone goes to work in business. Some choose to work in the public sector and some go to work for nonprofit organizations. Some people say that businesses do not do enough to help society. Many businesspeople disagree and say that they do more to help others than nonprofit groups because businesses not only provide products needed by society but...

answer to these questions in an essay paragraph of 300 words. What responsibility do businesses have...

answer to these questions in an essay paragraph of 300 words. What responsibility do businesses have to developing economies, workers, and the environment when they choose to pursue global strategies? Do you think corporations like Apple, which has a well-developed global supply chain, have done enough to manage the potential negative effects of their globalized operations?

Select three profitable businesses in Oman which apply Corporate Social Responsibility and explain what the activities...

Select three profitable businesses in Oman which apply Corporate Social Responsibility and explain what the activities that are provided by those businesses and how important they are from managerial accounting perspective.

It is true that entrepreneurship thrives on uncertainty because small businesses around the world have handled...

It is true that entrepreneurship thrives on uncertainty because small businesses around the world have handled the COVID-19 crisis better than larger firms. Discuss

Subjects