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RESPONSIBILITY
ACCOUNTING
Application of Responsibility Accounting
Cost Centers
Revenue Centers
Profit Centers
Inventory Centers
Factors Cost Center Revenue Center Profit Center Investment Center
Measured by the Costs relative to Revenue relative to Profit relative to Return on investment
Accounting some target some target some target relative to some
System target
Product Vice-President’s
Responsibility Report
Budget Actual Variance
Vice President’s office $10,000 $11,000 $1,000 U
Cutting department 500,000 4,98,000 2,000 F
Machining department 9,90,000 10,00,000 10,000 U
Assembly department 3,00,000 3,20,000 20,000 U
Total Controllable Costs S18,00,000 $18,29,000 $29,000 U
Cutting Department
Responsibility Report
Budget Actual Variance
Direct Material $2,50,00 $2,53,000 $3,000 U
Direct Labor 1,00,000 90,000 10,000 F
Variable overhead 50,000 52,000 2,000 U
Fixed overhead 1,00,000 1,03,000 3,000 U
Total Controllable Costs $5,00,000 $4,98,000 $2,000 F
Advantages of Responsibilities
Accounting
It Provides a way to manage an organization
that would otherwise be unmanaged.
Assigning responsibility to lower level managers allows higher level managers to pursue other
activity such as long term planning and policy making.
BUDGET
EVA
EVA
Control of Quality
Control of productivity
Is responsibility Accounting
building incapability
?
Section – I explains why and how
management can be related to
fragility?
Pragmatic Fragility
Management and fragility
Cognitive Fragility
Pragmatic Fragility
We want to say that the agency theory is based on a only restricted vision of fragility
related to lack of will to do. It is not covering multitude of situation where the problem is
not that the agent does not want, but his capacities are fragile.
The myth of Medusa and the
contradictory approach to management
Symbolizes
It emphasizes the radical paralysis faced by men in front of
contradiction.
I can say
Being able to say
I Can do
Being able to do
I can narrate
An acceptable, intelligible interpretation
of a fact through narration
Typical Sense
You are capable only when you are recognized by others
as capable.
Imputability
You are capable when you feel capable.
Relationship between Imputability &
Responsibility Accounting
In responsibility Accounting
Imputability is a relation going from the principal to
the agent.
Problems of this Concept