Responsibility Centers
Responsibility accounting focuses attention on responsibility centers. A responsibility center is a sub-unit of an organization under the supervision of a manager who has the responsibility for the activities of that responsibility center. Each sub-unit has certain activities to perform and its manager is assigned the responsibility and / or authority to carry out those activities. Responsibility center is the segment of business with reference to which information will be communicated to pin point responsibilities. In the words of Anthony and Races, “A responsibility center is like an engine in that it has inputs, which are physical quantities of material, hours of various types of labor, and a variety of services; it works with these resources usually; working capital and fixed assets are also required. As a result of this work, it produces output, which are classified either as goods, it they are tangible or as services, if they areContinue reading