1.

What is meant by the term decentralization

- By its book definition, Decentralization or decentralization is the process by
which the activities of an organization, particularly those regarding planning
and decision making, are distributed or delegated away from a central,
authoritative location or group.

2. What benefits are felt to result from decentralization in an organization

- Some advantages that may arise from decentralization in an organization is
some reduction in the burdens of top executives, facilitates diversification, it
provides product emphasis, it boosts and promotes motivation amongst the
peers and better control and supervision as well as quick decision making.
Although not all of it may be present in an organization that constitutes a
decentralization.

3. Identify three business practices that hinder proper cost assignment to segments of a
company
- The three business practices that may hinder proper cost assignment to
segments are
o Omission of some cost in the assignment process
o Use of improper methods for allocating costs among segments
o And assignment of cost to segments that are really common costs of the
entire organization.
Those common business practices above are some of the hindrances when it
comes to assignment of proper costs in the segments of the company, as it
states, that causes disturbances and inappropriate methods are also a cause for
hindering the company into allocating segments properly.

4. Explain how segment margin differs from the contribution margin. Which concept is
most useful to managers? Why?
- In order to identify which of the two concepts are more useful to managers let us
first discuss what those two segments entails
 Segment Margin – is a measurement of profitability that applies to
individual product lines, it is also calculated (as segment revenues
less the variable costs and avoidable fixed costs)
 Contribution Margin – this defines the amount remaining from sales
revenue once all variable costs have been removed, furthermore,
contribution margin ratio is commonly expressed as a percentage
of sales prices (Difference between a company’s sales and
variable expenses, expressed as %)
- Now those two are now defined, between the two concept the concept that are
most useful to managers are either, and it depends. Those two concepts does
not correlate to same conclusion but rather they focus on their own objectives,
therefore, if a manager is focusing in the measurement of its profitability that
manager should go for segment margin. Whilst, If that certain manager now
 wants to identify the amount remaining from its sales revenue once all variable
costs have been removed, contribution margin is the best concept, In conclusion,
There both concepts are useful in its own ways but when it comes to
management we should probably go for segment margin, because it tackles in
the individual product lines, now those individual product lines can produce and
can also be a way to identify once a problem arose.

5. What costs are assigned to a segment under the contribution approach?

- The cost that are assigned to a segment under the contribution approach are the
costs that are traceable to the segment, such as common costs are not allocated
to segments under the contribution approach [ A traceable costs of a segment is
a cost that arises specifically due to the existence of that certain segment]

6. What is a segment of an organization? Give several examples of segments

- A segment is any part or activity of an organization about which a manager seeks
cost, revenue, or profit data. Examples of segments include departments,
operations, sales territories, divisions and product lines.

7. Distinguish between traceable cost and a common cost. Give several examples each.
- Traceable Fixed Costs can be defined as fixed costs that can be specifically
attributed to a particular segment in the business. ... On the other hand, traceable
fixed costs are incurred as a common denominator, irrespective of different
departments existing within the company.