Managerial Accounting Mcgraw Hill Chapter 11 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Decentralized Organization
answer
The decision making authority is spread throughout the organization rather than being confined to a few top executives.
question
Responsibility Center
answer
Is used for any part of an organization whose manager has control over and is accountable for cost, profit, or investments.
question
Three types of responsibility centers
answer
Cost center, Profit center, Investment center
question
Cost Center
answer
Has control over costs but not over revenue or use of investment funds.
question
Example of a cost center
answer
Service apartments: accounting and finance
question
Profit Center
answer
Has control over both costs and revenue but not over the use of investment funds.
question
Investment Center
answer
Has control over cost, revenue, and investments in operating assets.
question
Return on Investment (ROI)
answer
net operating income divided by average operating assets or margin times turnover
question
Operating assets
answer
Includes cash, A/R, inventory, and plant and equipment.
question
Margin
answer
net operating income divided by sales
question
Turnover
answer
sales divided by average operating assets
question
Residual Income
answer
The net operating income that an investment center earns above the minimum required return on its operating assets. NOI-(Average operating assets x min required rate of return).
question
Economic Value added
answer
An adaptation of residual income that has been adopted by many companies.
question
Delivery cycle time
answer
The amount of time from when a customer order is received to when the completed order is shipped. Wait time + Throughput time
question
Throughput Time
answer
The amount of time required to turn raw materials into completed products. Process time + inspection time + move time + queue time
question
Manufacturing Cycle Efficiency
answer
Process time / Throughput time
question
Balanced Scorecard
answer
Consists of an integrated set of performance measures that are derived from and support a company's strategy
question
Transfer price
answer
The price charged when one segment of a company provides goods or services to another segment of the same company.
question
Suboptimization
answer
Occurs when managers do not act in the best interests of the overall company
question
Negotiated transfer price
answer
Results from discussions between the selling and buying divisions.
