AMA Q22 - Chapter 14 Flashcards
1
Q
Responsibility Accounting
A
Used to measure the performance of decentralised divisions of a business
Places responsibility of costs and revenues that are controllable to the rightful manager
2
Q
What two metrics monitor the performance of investment centre managers?
A
Return On Investment
and
Residual Income
3
Q
ROI formula
A
(Profit PBIT / Capital Employed) x 100
4
Q
RI formula
A
PBIT - (investment x cost of capital)
5
Q
Cost of Capital
A
6
Q
Transfer Pricing
A
the price that goods transferred from one division of a company to another are charged at
7
Q
Main consideration when it comes to transfer pricing?
A
Does it act in the best interests of the entire company?
8
Q
A
