Technical article - Decentralisation and the need for performance measurement

Question 1

What is the managers area of responsibility for a cost centre?

Answer 1

Decisions over cost

Question 2

What is the managers area of responsibility for a profit centre?

Answer 2

Decisions over costs and revenue

Question 3

What is the managers area of responsibility for an Investment centre?

Answer 3

Decisions over costs , revenues and assets.

Question 4

What is a typical performance measure for a cost centre?

Answer 4

Standard costing

Variance analysis

Question 5

What is a typical performance measure for a profit centre?

Answer 5

Controlable profit

Profit margins etc

Question 6

What is a typical performance measure for an Investment centre?

Answer 6

ROI

RI

Question 7

What are the four aspects of the balanced scorecard?

Answer 7

Financial
Customer
Internal process
Learning and Growth