ACT202 Chapter Notes - Chapter 9: Bell State, Management Accounting, Strategic Business Unit
ACT 202 Management Accounting
Master budget and responsibility accounting Continued….
The Budgeting-Performance Evaluation Cycle
Budgeting and performance feedback is a continuous cycle
Actual operating data are accumulated and then compared with budgeted performance
Information is gathered to explain differences between budgeted and actual results
Managers continuously attempt to improve, maintain, or capitalise on current
operations
Budgeting and Responsibility Accounting
Organisation structure and responsibility
•Organisation structure
•an arrangement of lines of responsibility within the organisation.
•Responsibility centre
•a part, segment or subunit of an organisation whose manager is
accountable for a specified set of activities.
•are significant activities which show revenues and/or expenses that are
controllable by a manager.
•Responsibility accounting
•a system that measures the plans, budgets, actions and actual results of
each responsibility centre,
•in a manner that emphasises the factors controllable by the manager of
each centre.
Types Of Responsibility Centres
For responsibility accounting, reports are prepared for units that operate under the control and
authority of a responsibility centre manager, such as:
•Departments
•Segments of departments
•Groupings of departments
•Divisions
•Regions
Budgeting and responsibility accounting
Types of responsibility centre:
•Cost Centre – the manager is accountable for costs only
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Document Summary
Budgeting and performance feedback is a continuous cycle. Actual operating data are accumulated and then compared with budgeted performance. Information is gathered to explain differences between budgeted and actual results. Managers continuously attempt to improve, maintain, or capitalise on current operations. For responsibility accounting, reports are prepared for units that operate under the control and authority of a responsibility centre manager, such as: departments, segments of departments, groupings of departments, divisions, regions. Types of responsibility centre: cost centre the manager is accountable for costs only, revenue centre the manager is accountable for revenues only, profit centre the manager is accountable for revenues and costs. Investment centre the manager is accountable for investments, revenues and costs: strategic business unit (sbu) - often used to refer to investment centres and occasionally to profit centres which have their own distinct markets and strategies. Revenues are not reported as controllable items.
