Choices About Responsibility Centers Homework Help

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The responsibility centers are the part or sub unit of a company. A manager is responsible for the responsibility center, for which he is delegated authority and responsibility. The responsibility centers are the departments or branches of a company.In the case of MNE (Multinational Establishment) decisions to delegate the responsibility and authority are decided by the board of management.

Hence it is important to understand the choices about responsibility centers, details of choices about responsibility centers can be understood with choices about responsibility centers homework help.

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Understanding the choices about responsibility centers:

In principal the top management of a company has the authority to delegate the authority to a responsibility center. The following factors are considered to decentralize the company into various responsibility centers.

  • Maximum span of management.
  • The style of management to control and direction-finding.
  • Transaction costs.
  • The business model and strategy applied by the company.

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Decisions of the choices of responsibility centers?

 The decisions on the choices of a responsibility centers are not fixed but decided on the case to case basis by the top management or board of management. In order to decide upon a particular situation a number of managerial tools are considered. The situations are based on the following variables.

  • A relationship between the input and output of a responsibility center determines the label.On the basis of such situation a responsibility center can be in practice consists of a business unit, a legal entity, a geographical unit or a department.
  • The steering and control concept.
  • The most common compensation method.
  • The legal framework

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Choices about responsibility center types:

The types of responsibility centers are as follows:

  1. Roles and responsibility within a company or MNE.
  2. Value added decisions by top management/board of management.

There are four types of responsibility center designated upon the type of responsibility held which you can understand with choices about responsibility center assignment help.

  1. Cost Center-

The responsibility center is a cost center if it is determined that revenue is a factor. If revenue is not the responsibility of a manager of the department or center, then the center is a cost center.

  1. Revenue Center-

However the revenue is the ultimate objective of a company, but revenue centers are the smallest portion of the company. The managers are evaluated upon their capability to generate the revenue.

  1. Profit Center-

The profit centers are quite common centers. The managers are producing revenue but also supervising costs to produce the profitability.

  1. Investment Center-

The managers in the investment center are responsible for asset management and profit maximization. If asset management is involved, then the centers are known as the investment centers.

In order to understand choices about responsibility center completely, you need to first understand how it works.

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