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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Discuss the differences between centralized and decentralized decision making.

To determine

State the differences between centralized and decentralized decision making.

Explanation

Centralized And Decentralized Decision Making:

Under centralized decision making, the decisions are made by the top-level managers and the lower level managers are obliged to implement those decisions. Under decentralized decision making, the lower-level managers are allowed to make decisions and implement it to the areas of responsibility.

The following table represents the difference between centralized and decentralized decision making:

BasisCentralized Decision MakingDecentralized Decision Making
Power to make decisionsThe decision making power lies with the top management.The lower-level managers have the responsibility to make decisions.
Delegation of powerThe power or authority is not transferred to the lower managers.The power or authority is transferred to the lower managers.

Table (1)

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