Decentralization is defined as a system in which the authority for decision making is delegated to other levels of management. This is otherwise known as divisionalisation. It is the division of a business into autonomous regions or product business. Each division has its own revenue which might be a subsidiary company under the head office or profit centre or investment centre within a single company. Required: a. Discuss THREE (3) ways how decentralization system can benefit a company. b. Explain the roles of manager in each responsibility centres.

Decentralization is defined as a system in which the authority for decision making is delegated to other levels of management. This is otherwise known as divisionalisation. It is the division of a business into autonomous regions or product business. Each division has its own revenue which might be a subsidiary company under the head office or profit centre or investment centre within a single company. Required: a. Discuss THREE (3) ways how decentralization system can benefit a company. b. Explain the roles of manager in each responsibility centres.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 1EB: For the following situations identify whether the description is a centralized or decentralized...

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A unit of an organization is referred to as a profit center if it has: Multiple Choice Authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply, and significant control over the amount of invested capital. Authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply. Responsibility for combining material, labor, and other factors of production into a final output. Authority to provide specialized support to other units within the organization. Authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply.