管理会计加里森第15版答案Chap011.docx

Chapter 11Performance Measurement in Decentralized OrganizationsSolutions to Questions11-1In a decentralized organization, decision-making authority isn’t confined to a few top executives; instead, decision-making authority is spread throughout the organization.11-2The benefits of decentralization include: (1) by delegating day-to-day problem solving to lower-level managers, top management can concentrate on bigger issues such as overall strategy; (2) empowering lower-level managers to make decisions puts decision-making authority in the hands of those who tend to have the most detailed and up-to-date information about day-to-day operations; (3) by eliminating layers of decision-making and approvals, organizations can respond more quickly to customers and to changes in the operating environment; (4) granting decision-making authority helps train lower-level managers for higher-level positions; and (5) empowering lower-level managers to make decisions can increase their motivation and job satisfaction.11-3The manager of acost center has control over cost, but not revenue or the use of investment funds. A profit center managerhas control over both cost and revenue. An investment center manager has control over cost and revenue and the use of investment funds.11-4Margin is the ratio of net operating income to total sales. Turnover is the ratio of total sales to average operating assets. The product of the two numbers is the ROI.11-5Residual income is the net operating income an investment center earns above the company’s minimum required rate of return on operating assets.11-6If ROI is used to evaluate performance, a manager of an investment center may reject a profitable investment opportunity whose rate of return exceeds the company’s required rate of return but whose rate of return is less than the investment center’s current ROI. The residual income approach overcomes this problem becauseany project whose rate of return exceeds the company’s minimum required rate o