Responsibility Accounting » RA is a system of control by delegating and locating the responsibility for costs. It is similar to an other system of cost such as Standard Costing or Budgetary Contro| but with greater emphasis towards fixing of responsibility of the persons entrusted with the execution of specific job. In RA , there is identification of costs with the person responsible. This helps in having a better control over costs because strictly speaking , cost control is not as much a control over costs as it is a control over the who incur the costs.Responsibility Accounting » “A system of accounting that recognize various responsibility centres throughout the organisation and reflects the plan and action of each of these centres by assigning particular revenue and costs to the one having the pertinent responsibility”.Cost Centre A Responsibility centre is a cost centre where the manager is accountable for the costs that are under his control but not for its revenue Only those cost are charged to cost centre which are controllable by the manager of the cost centre. Example- Maintenance dept of hotel may be cost centre because the maintenance manager is bility only for cost.Revenue Centre » A Responsibility centre is a revenue centre in which manager controls revenue but does» not control either the cost of products/service or the level of investment made in responsibility centre. » Revenue Centre may control selling price, product mix and promotional/activities to enhance revenue. » Example- The sales dept of a hotel will be a revenue centre because it is responsible only for revenues.Profit Ce nt re OM ad A Responsibility Centre is a profit centre where the manager is accountable for Sales Revenue as well as costs: The difference between revenue and costis profit . Example- A_unit of a.company is a profit centre if it is responsible for sales.as well as production in that unit. Hotel manager would be incharge of a profit centre because he is responsible for revenue and costs. Most individual units of chain operations, whether thay are esteurant , hotels , motels, or stores are treated as ProfitInvestment Centre- » AResponsibility Centre is an investment centre where is manager is responsible for sales revenues and costs and in addition is responsible for some capital investment decision relating to working capital management , capital structure and capitalization’etc. His performance is measured in terms of profit as related to capital base. Investment Centre is also like an independent business where even investment decision are made by manager ofExample- A New hotel being developed by a company would be an investment centre if the manager is responsible for investment in the hotel project and also for its costs and revenues. Investment centresVs_ profit centre - is that an investment centre adds responsibility for investment to profit centre responsibilities.Features Of Responsibility Accounting ( Method/Steps Of Control ) Responsibility Centre are created. A plan is prepared in the form of budgets or (targets)standards for each responsibility centres. The performance of responsibility centre is evaluated by comparing actual results with those budgeted in the regular monthly reports. The variance are*reported to the higher management together with ie name of the Manager of the responsibility centre entrusted with the job Corrective and preventive action is taken , and intimated to the executive of responsibility centre.Advantages eRe 1) Responsibility for any adverse performance is clearly identified. 2) The morale of the manager is high because of their active participation in decision making. 3) Responsibility Accounting provides increased job‘Ssatisfaction and greater motivation to put in icbest efforts.Limitation 1) Problem in establishing controllability.A particular item of cost is controllable when it can be definitely influenced by given manager. But hardly any cost are clearly under the sole influence of any one person . Ex- Material Cost=Material Price*material Quantity Material Price are influenced by purchase manager while material quantities influenced by production