From the course: Accounting Foundations: Managerial Accounting
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Responsibility accounting and the standard cost system
From the course: Accounting Foundations: Managerial Accounting
Responsibility accounting and the standard cost system
- Responsibility accounting is a system in which managers are assigned and held accountable for certain costs, revenues, and/or assets. There are two important behavioral considerations in assigning responsibilities to managers. First, the responsible manager should be involved in developing the plan for the unit over which the manager has control. Current research indicates that people are more motivated to achieve a goal if they participate in setting it. Sets participation assures that the goals will be reasonable. And perhaps more importantly, that they will be perceived to be reasonable by the managers. Second, a manager should be held accountable only for those costs, revenues or assets over which the manager has substantial control. Some costs may be generated within a segment, but control over those costs lies outside that unit. For example, the manager of the Ventura manufacturing division may be held responsible for labor costs, but employee wages may be determined by a…
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