Question

Decentralization divides company operations into various reporting units. Most decentralized subunits can be described as one of four different types of responsibility centers. Requirements 1. Explain why companies decentralize. Describe some typical methods of decentralization. 2. List the four most common types of responsibility centers, and describe their responsibilities. Requirement 1. Explain why companies decentralize. Describe some typical methods of decentralization. Companies usually decentralize when they to manage the entire organization's daily operations. Decentralization is often based on: become too small for one management group become too small for one person grow too large for one management group grow too large for one person Requirement 2. List the four most common types of responsibility centers, and describe their responsibilities Responsibility centers Description of responsibilities 1 V 2 4

Answer 1

1. business function

2.

1	Cost Center	responsible for controlling cost
2	Investment center	responsible for generating profit and efficiently managing the division's invested capital
3	Profit center	responsible for generating profit through controlling cost and generating revenue
4	Revenue center	responsible for generating revenue