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Comment on the new responsibility-centre designation for the Logistics and Distribution Department.

Comment on the new responsibility-centre designation for the Logistics and Distribution Department.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 1TIF: Ethics in Action The controller of Tri Con Global Systems Inc. has developed a new costing system...
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  1. Xerox Corporation has been an innovator in its responsibility-accounting system. In one initiative, management changed the responsibility-centre orientation of its Logistics and Distribution Department from a cost centre to a profit The department manages the inventories and provides other logistical services to the company’s Business Systems Group. Formerly, the manager of the Logistics and Distribution Department was held accountable for adherence to an operating expense budget. Now the department “sells” its services to the company’s other segments, and the department’s manager is evaluated partially on the basis of the department’s profit. Xerox Corporation’s management feels that the change has been beneficial. The change has resulted in more innovative thinking in the development and has moved decision making down to lower levels in the company.

 

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Comment on the new responsibility-centre designation for the Logistics and Distribution Department.

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