Page 53 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems Neha Tikoo, Lovely Professional University

Notes Unit 4: Responsibility Centers

CONTENTS
Objectives
Introduction

4.1 A Responsibility Centre
4.1.1 Purpose of Responsibility Centre
4.1.2 Types of Responsibility Centres

4.2 Revenue Centres
4.3 Expense Centres
4.3.1 Discretionary Expense Centres
4.3.2 Control Aspects of some Discretionary Expense Centres
4.4 Marketing Centres

4.5 Research and Development Centres
4.6 Profit Centres
4.6.1 Advantages of Profit Centres

4.6.2 Limitations and Problems of Profit Centre
4.6.3 Other Profit Centres
4.6.4 Profit Centre Evaluation
4.7 Investment Centres
4.8 Economic Value Added (EVA) (Residual Income)

4.8.1 EVA Approach (Stern Stewart Approach)
4.8.2 Three Components of EVA
4.8.3 Evaluation of EVA

4.9 Measuring and Controlling of Assets Employed
4.10 Multiple Performance Measures
4.11 Summary
4.12 Keywords
4.13 Review Questions

4.14 Further Readings

Objectives

After studying this unit, you will be able to:

 Understand the concept of responsibility accounting and its structure
 Discuss the expense centres

48 LOVELY PROFESSIONAL UNIVERSITY