1.

) Difference between centralize ad decentralize

Centralize made by higher level, implemented by lower level
Dencentralize- made and implemented by lower level
2.) Units created in decentralization : Divisions
3.) Advantages of decentralization:
(a) ease of gathering and using local info
(b) focuses on central management
(c) training and motivating segment managers
(d) enhanced competition
4.) turn over = sales/ ave. Operating asset
5.) ROI=operating income/ ave op asset
6.) Residual income = operating income -( minimum rate of return x ave operating
asset)
7.)Economic value added after tax income (actual percentage cost of capital x
total capital employed)
8) impact of reducing inventories in ROI:
(a) encourages managers to focus on sales, expenses and investments
(b) focus on operating asset
(c) focus on asset efficiency
9.) average operating aseet =beg . operating asset + end operating asset / 2
10.) emphasis of economy value added: actual cost and after tax operating income
11who sets the rate in ROI : company
12
13tranfer pricing = is the price charged for a component by the selling dvision to
the buying division of the same company
14 types of transfer prices : market proce, cost based transfer proce, negotaiated
transfer price
15 what shall be used if market price is missing :cost based transfer pricing
17] different responsibility centers : revenue, cost , profit , investment
18 responsibility center =segment of a business whose manger is accountable for
specified sets

19 Margin =ratio of operating income to sales (operating income/ sales)

2
21
22 what are absolute dollar values =operating income, residual income , eva
23
24 actual percentage cost of capital x total capital employed
25
26 what is balance scorecard ? is a strategic management system that defines a
strategic based responsibility accounting system
27 what is internal business process: internal business processes reduced to provide
value for customers and owners
28 perspectives of Balance score cardfinancial, customer, internal process, learning
and growth
29 velocity = number of outputs produced at a given period
30 manufactuting cycle efficiency = values added over time spent = processing
time/ ( processing tine + moving to time + inspection + waiting)