What does decentralization mean in the context of a management
Define decentralization in the context of the the management control system.
Explanation of Solution
Decentralization:
When the power of decision making is transferred from the higher authority to various lower authority, then it is known as decentralization.
Decentralization in the context of the management control system:
Decentralization is the transfer of authority to various subordinates. These subordinates are able to take the management level decisions without seeking the permission of higher authority.
But when the decision making is out of their authority, then these subordinates have to seek the permission of a higher level of management.
Example:
A business has branches in several cities. Every manager of each city has the authority to decide how much raw material is needed for production.
Thus, decentralization is the process of transferring authority to various subordinates.
Want to see more full solutions like this?
Chapter 12 Solutions
Fundamentals Of Cost Accounting (6th Edition)
- Why is it important to have a very sound and well-developed internal control structure?arrow_forwardDistinguish between entity-wide and transaction controls. Which components of internal control are typically entity-wide controls? Which components of internal control are typically transaction controls?arrow_forwardDiscuss the difference between centralized and decentralized organizations. Does the size of the organization influence whether the organization has a centralized or decentralized structure? Explain.arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeAccounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub