Student Version
o Repetition is an important component, a key part
of learning. In memory, the more times patterns of
thought are repeated, the more likely you will be
able to recall information.
o These PowerPoint slides have been modified from
the lecture decks by making them fill-in-the-blank.
Why? So that you get an opportunity to repeat a
visual cue (from the lecture or the book) via
completing text here.
o In addition, most text book exhibits have been
removed as they are available in your text directly.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Centralized and Decentralized Operations
o
In a centralized company, all major planning
and operating decisions are made by top
management.
Centralized and _______ Operations
o In a _______ company, managers of separate
_______ or _______ are delegated operating
responsibility. The _______ (unit) managers are
responsible for planning and controlling the
operations of their _______ .
Advantages of Decentralization
o For large companies, it is difficult for top
management to do the following:
 _____________________________________________
_____________________________________________
 _____________________________________________
_____________________________________________
Advantages of Decentralization
o _______ operations provide excellent _______
for managers.
o Delegating _______ allows managers to
develop _______ _______ early in their careers.
o It helps a company _______ managers.
o As a result of working _______ with _______ ,
managers become more _______ in suggesting
_______ and _______ improvements.
Disadvantages of Decentralization
o A primary _______ is that decisions made by
one _______ may _______ _______ the profits of
the company.
o Decentralization may result in duplicate
_______ and _______ .
Responsibility Accounting
o In a decentralized business, accounting assists
managers in evaluating and controlling their
areas of responsibility, called _____________
_______ .
Responsibility Accounting
o _______ accounting is the process of _______
and _______ operating data by _______ centers.
Three common types of responsibility centers
are:
 __________ centers
 __________ centers
 __________ centers
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Responsibility Accounting for Cost Centers
o A _______ center manager has responsibility
for _______ costs.
o Cost centers may _______ in _______ from a
small department to an entire manufacturing
plant.
o Cost centers may exist _______ _____ _____
centers.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Responsibility Accounting for Profit Centers
o A _______ _______ manager has the
responsibility and authority for making
decisions that affect both _______ and _______
and, thus, _______ .
o _______ centers may be _______ , _______ , or
_______ .
Responsibility Accounting for Profit Centers
o _______ _______ are revenues earned by the
_______ center.
o _______ _______ are costs that can be _______
(controlled) by the decisions of _______ center
_______ .
Service Department Charges
o
Examples of service departments include the
following:
 _________________________________
 _________________________________
 _________________________________
 _________________________________
 _________________________________
 _________________________________
 _________________________________
 _________________________________
 _________________________________
 _________________________________
Service Department Charges
o _______ department charges are _______
expenses to a _______ center.
o _______ provided by internal _______ service
departments are often more _______ than
services contracted with outside _______ .
o Service _______ _______ are _______ to _______
centers based on the usage of the service by
_______ _______ center.
Profit Center Reporting
o The income from _______ is a _______ of a
manager’s _______ .
o In evaluating the profit center manager, the
_______ from _______ should be compared
over time to a _______ . However, it should not
_______ compared across _______ _______ .
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Responsibility Accounting for Investment
Centers
o An _______ _______ manager has the
responsibility and the authority to make
decisions that affect not only _______ and
_______ , but also the assets invested in the
_______ .
Rate of Return on _______
o One measure that considers the _______ of
_______ _______ in an _______ center is the
_______ __ _______ __ _______ (ROI) or rate of
return on assets. It is computed as follows:
ROI =
Rate of Return on Investment
Dupont Formula
ROI =
x
_____ _____
__________
_________
Rate of Return on Investment
o The _______ margin and the _______ turnover
reflect the following underlying operating
relationships of each division:
 _______ _______ indicates _______ _______ by
computing the rate of _______ _______ on each
_______ _______ .
 _______ _______ indicates _______ _______ by
computing the number of _______ _______
generated by each _______ of _______ _______ .
Residual Income
o _______ _______ is the excess of income from
operations over a _______ _______ income from
_______ , as shown below:
Residual Income
o The major _______ of residual income as a
performance _______ is that it considers both
the minimum _______ _______ of _______ ,
_______ assets, and the income from _______
for _______ _______ .
The Balanced Scorecard
o The _______ _______ is a set of _______
performance measures for a company.
o It normally includes performance measures for
customer _______ , _______ and learning, and
internal_______ , as shown in Exhibit 7.
THE BALANCED
SCORECARD
The Balanced Scorecard
o Some common performance measures used in
the balanced scorecard approach are shown
below.
(continued)
The Balanced Scorecard
o Some common performance measures used in
the balanced scorecard approach are shown
below.
(continued)
The Balanced Scorecard
o Some common performance measures used in
the balanced scorecard approach are shown
below.
(continued)
The Balanced Scorecard
o Some common performance measures used in
the balanced scorecard approach are shown
below.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Transfer Pricing
o When divisions transfer products or render
services to _______ _______ , a _______ _______
is used to charge for the products or services.
_______ _______
o
Three common approaches to setting transfer
prices are as follows:

_______ _______ approach

_______ _______ approach

_______ approach
Market Price Approach
o Using the _______ _______ approach, the
transfer price is the price at which the product
or service transferred could be sold to _______
_______ .
Negotiated Price Approach
o The _______ _______ approach allows the
managers of decentralized units to _______
(negotiate) among _______ on a transfer price.
o The only constraint is that the transfer price be
_______ than the _______ price, but _______
than the supplying division’s variable _______
per _______ .
Cost Price Approach
o Under the _______ _______ approach, cost is
_______ to _______ transfer prices. A _______ of
costs may be used in this approach, including
the following:
 _______ _______ cost per unit
 _______ _______ cost per unit
Cost Price Approach
o If _______ product _______ per _______ is used,
direct materials, direct labor, and factory
overhead are _______ in the transfer price.
o If _______ _______ cost per unit is _______ , the
_______ factory overhead cost is _______ from
the transfer price.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.