ECONOMICS

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COST ACCOUNTING

RESPONSIBILITY ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
There are instances where a management decision would be beneficial for a given profit center, but not for the company. From the overall company viewpoint, this decision would lead to
A
Goal congruence
B
Decentralization
C
Sub-optimization
D
Profit maximization
Explanation: 

Detailed explanation-1: -b 30. When a manager takes an action that benefits his or her responsibility center, but not the company as a whole, a. it is a non-controllable action.

Detailed explanation-2: -Answer: An investment centerA segment of an organization responsible for costs, revenues, and investments in assets. is an organizational segment that is responsible for costs, revenues, and investments in assets. Investment center managers have control over asset investment decisions.

Detailed explanation-3: -Responsibility Accounting-provides access to cost and revenue information under the supervision of a manager having a direct responsibility for its performance. It is a system that measures the plans (by budgets) and actions (by actual results) of each responsibility center.

Detailed explanation-4: -A revenue center is an organizational segment in which a manager is held accountable only for revenues.

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