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Management Accounting - Measue Of Qualitive Plans And Controls

An example of this is BHP whom of which has different departments for there colour bond products, accounting and finance department, human resources management, sales department and so on. The top end managers of an organisation should and endeavor to ensure that different individuals within the units and departments strive to reach the common goal of the organisation. To achieve this task, managers use information provided a form of accounting known as "Responsibility Accounting." .
             Responsibility accounting refers to "tools and concepts used to measure the performance of an organisation's people and sub units." The basis of a responsibility accounting system is to appoint all of the different departments within an organisation a specific type of responsibility center. A responsibility center is a sub-unit within the organisation whose manager is held responsible for specified financial results of that unit. Responsibility centers can be broken down into four common types as follows;.
             1. Cost Center - A cost center is a department in an organisation, whose manager is held accountable for the costs incurred by the unit. The painting department of an automobile company is an example of this.
             2. Revenue Center - Within a revenue center, the manager is held accountable for the revenue generated from the department. An example of this would be the sales team at of a manufacturing firm.
             3. Profit Center - A profit center is a unit where the manager is held accountable based on the bottom line of the unit. Because of the fact that the bottom line is made up of both revenue and expenses, the manager of a profit center could be held accountable for both the income and expenses of the department. .
             4. Investment Center - The last common type of responsibility center is known as an investment center. An investment center manager is held accountable by the profit and the invested capital used by the department to generate that profit.


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8. Adapted Responsibility Accounting

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