Resume pertemuan 10&11

Responsibility Accounting is a system that measures the result of each responsibility center and
compares those results with some measure of ecpected or budgeeted outcome.

There are four major types of rersponsibility centers:

1. Cost center
2. Revenue center
3. Profit center
4. Investment center

Residual income is the diffrence between operating income and the minimum dollar return required
on a company’s operating assets.

Economic value added is after-tax operating profit minus the total annual cost of capital.

Trannsfer Pricing : The transferred good is revenue to the selling division and cost to the buying
division. This value is called transfer pricing.

Major issues on Transfer Pricing:

1. Impact on divisional performance measures

2. Impact on firm wide profits
3. Impact on divisional autonomy