Roi and Variance Analysis

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ROI and Variance Analysis

ROI and Variance Analysis
What are the four major budgets of a health care organization? Briefly discuss each. Describe the four types of responsibility centers, including the characteristics of each? The revenue center represents the organizational link in which the activity is appreciated. The cost center represents the organizational link in which products/ services are obtained which generate expenses (costs) with the help of which there can be measured the efficiency and efficaciousness of the centers’ activity as value according to the revenue acquired, such as the sales department within an organization. The profit center is the operational subdivision which performs its activity by attracting resources which generate revenue. The investment center is the organizational link in which there can be emphasized the relationship/difference between the revenue obtained from product sales and the investment made for all the resources necessary in production. What are transfer prices? Discuss their major disadvantages? The transfer price is the price that one division of a company charges another division of the same company for a product transferred between the two divisions. The basic purpose of transfer pricing is to induce optimal decision making in a decentralized organization. Disadvantages: Lack of goal congruence among managers in different parts of the organization. Insufficient information available to top management; increased costs of obtaining detailed information. Lack of coordination among managers in different parts of the organization. Name two financial measures used to judge the performance of investment centers that are not used to measure the financial performance of profit centers? Financial ratios are mathematical equations derived from information presenting on a company’s financial statements. All financial ratios are used as indicators to reveal the financial health of the company, but some key ratios reveal...
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