Responsibility Accounting and Cost Control

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Topic:Responsibility Accounting and Cost Control.


Management control systems


|Sr.No |Topic |Page No | |1 |Meaning of Responsibility Accounting |3 | |2 |Steps involved in Responsibility Accounting |5 | |3 |Responsibility Centres |6 | |4 |Cost Centres v/s Responsibility centres |9 | |5 |Development of measures of performance |10 | |6 |Advantages and disadvantages of Responsibility Accounting |11 | |7 |Types of Responsibility Centres & Traditional Evaluation Methods |12 | |8 |Controllability Concept |14 | |9 |Relevance of responsibility reporting |14 | |10 |Cost Control |19 | |11 |Forecasting for Accounting Cost Control |20 | |12 |The Cost Control Problem |21 | |13 |Establishing A Cost Control System |24 | |14 |Cost Control and Cost Information System |25 | |15 |Cost Control Methods |25 | | |Case Studies (I, II, III, |28 | | |References |40 | | | | |

Responsibility Accounting:
Responsibility Accounting is a system under which managers are given decision-making authority and responsibility for each activity occurring within a specific area of the company. Under this system managers are made responsible for the activities of segments. These segments may be called departments or divisions. Eric Kohier defines Responsibility Accounting as “a method of accounting in which costs are identified with persons assumed to be capable of controlling them, rather than with products or functions. It differs from activity accounting, in that it does not in itself require an organizational grouping by activities and Sub-activities or provides a systematic criterion of system design.” Charles T. Homgreen defines “Responsibility Accounting is a system of accounting that recognizes various responsibility centres throughout the organization and reflects the plans and actions of each of these centres by assigning particular revenues and costs to the one having the pertinent responsibility. It is also called profitability accounting and activity accounting”....
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