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.