BUS 254 Chapter Notes - Chapter 11: Profit Center, Cost Driver, Income Statement

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Masood Kamlani

Document Summary

Goal congruence: the managers of subunits throughout an organization strive to achieve the goals set by top management. Responsibility accounting refers to the various concepts and tools used by management accountants to measure the performance of people and departments in order to foster goal congruence: responsibility centres (page 474) The basis of responsibility accounting is the designation of each subunit in the organization as a particular type of responsibility centre. Responsibility centre: a subunit in an organization whose manger is held accountable for specified financial results of the sub units activity. A cost centre is an organizational subunit, such as a department or division, whose manager is held accountable for the costs incurred in the subunit. The manager of a revenue centre is held accountable for the revenue attributed to the subunit. A profit centre is an organizational subunit whose manager is held accountable for profit.