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Chapter 24: Q4RQ (page 1355)
What is goal congruence?
Goal congruence is the stage where the various departments of anorganizationshare common goal.
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What is a responsibility center?
Decentralization divides company operations into various reporting units. Most decentralized subunits can be described as one of four different types of responsibility centers.
Requirements
1. Explain why companies decentralize. Describe some typical methods of decentralization.
2. List the four most common types of responsibility centers, and describe their responsibilities.
Financial performance is measured in many ways.
Requirements
1. Explain the difference between lag and lead indicators.
2. The following is a list of financial measures. Indicate whether each is a lag or a lead indicator:
a. Income statement shows net income of \(100,000
b. Listing of next week鈥檚 orders of \)50,000
c. Trend showing that average hits on the redesigned Web site are increasing at 5% per week
d. Price sheet from vendor reflecting that cost per pound of sugar for the next month is $2
e. Contract signed last month with large retail store that guarantees a minimum shelf space for Grandpa鈥檚 Overloaded Chocolate Cookies for the next year
Match the responsibility center to the correct responsibility report.
Responsibility Centers | Responsibility Reports |
14. Cost center | a. Includes flexible budget variances for revenues and costs. |
15. Revenue center | b. Includes flexible budget variances for costs. |
16. Profit center | c. Includes flexible budget variances and sales volume variances for revenues. |
List the disadvantages of decentralization.
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