CHAPTER 9 or mas focus yung mga nasa taas sa mga mas

malalalim pang plano or decisions.

DECENTRALIZED OPERATIONS AND SEGMENT
8. Segments managers get more satisfaction from
REPORTING
their jobs because they see the immediate result of
their decisions.
 Delegation of decision-making
 Dahil nga may kapangyarihan magdecide yung
 From the higher-ups to the lower-level managers
mga lower-level managers, nakikita agad nila
 In decentralization, some aspects of
yung result based sa mga naging decisions
decision making ay ipinapaubaya sa mga
nila sa specific area na nakaassign sila.
lower-level managers
 Binibigyan ng power ang mga lower-level
9. Segment managers are encouraged to give their
managers na magdecide para sa mga
best effort.
sub-unit or operations na under nila.
 Why? Because ieevaluate sila based on the
decisions na ginawa nila. Kaya yung mga
ADVANTAGES OF DECENTRALIZATION
managers under nito or tinatawag din na
subunits managers ay gagawin or ibibigay nila
1. Greater responsiveness to local needs
yung best nila sa paggawa lalo na in making
 May business na may iba’t ibang branches
decision for making best solutions and good
then yung manager na naka assign na isang
results.
area, if nalaman niya if ano yung mga
customer need, makakapag respond agad sa
10. Training for future managers
mga changes na mangyayari sa mga local
 Yung mga galing sa mga lower-level managers
areas.
ay nattrain na rin for free. Also sa kadahilanan
rin nga na yung mga lower-lever managers sila
2. Gains due to quicker decision making
yung maaaring maging managers in the future
 In decentralization, kung sino yung manager
or maiangat ng positions.
na humaharap if there’s a problem, siya rin
yung gumagawa ng solution at hindi na
11. Better and faster performance evaluation
inaakyat pa sa mga higher-ups that’s why
 Kasi nga sa decentralization, malalaman agad
nagkakaroon ng mabilisang decision
kung sino ang gumawa ng decisions, mapipin
makingkaya nagkakaroon agad ng epekto sa
point mo kung sino ang nagdecide. Alam mo
financial statement or sa income.
agad kung sino yung ippromote or idedemote.
3. Increases motivation of subunit managers
 Kapag ikaw ay isa sa mga lower-level
LIMITATIONS OF DECENTRALIZATIONS
managers na inassign nagkakaroon ka ng
motivation to do your best dahil nga binigyan
1. May result to dysfunctional or incongruent
ka ng power to decide, so yung lahat ng
decision-making.
mangyayari sa area na ikaw yung naka assign,
 Nangyayari ito kapag yung criteria na
ikaw ang nagmamando.
ginagamit ng mga subunit managers in
decision making ay hindi akma o hindi
4. Aids management development and learning
kapareho nung ginagamit ng company’s
 Yung mga lower-level managers mostly sila
organization as a whole.
yung mga future vice president or future senior
managers, kaya kapag ang decentralization ay
2. Attention may be devoted to a sub-unit rather
ipinapatupad nagkakaroon na rin sila ng
than to the organization as a whole.
training.
 Yung sub-unit managers may tendency na
yung gagawin nilang decision ay para sa
5. Sharpens the focus of subunit managers
ikabubuti ng sub-unit na pinamamahalaan nila.
 Yung mga subunit managers or lower-level
Possible na may decision na ginawa pero
managers, dahil nga meron silang power mag
makakasama pala ito sa ibang sub-unit, pero
decide sa area nila, dun lang sila nagfofocus.
dahil nga focus sila sa kung ano lang yung
area na pinamamahalaan nila wala silang
6. Decisions are made best in the battlefield
pakialam.
 Kung nasaan ang problema, kung sino mismo
yung mga taong andon sa problem na yun, sila
3. Cost to gather information is increased.
na rin mismo ang mag iisip ng solutions hindi
 Dahil nga yung mga sub-unit, may sari sarili
yung mga higher-ups pa na hindi naman
silang pagsesearch ng mga better data na
nakakaranas nung problem s isang area.
pagbabasehan ng kaninlang decisions. Dahil
nga may kanya kanya sila, the more na
7. Management can focus on long-range planning
maraming nagreresearch mas costly sa
 Ang mga tinutukoy dito ay yung mga higher-
company.
level, dahil nga sa decentralization may power
yung mga lower-level managers, yung dapat
iisipin pa nung mga higher ay yung mga lower
na ang gagawa that’s why mas maraming time
4. Activities may be duplicated.
 Posible na yung mga activities na ginagawa ng
isang sub-unit ay ginagawa rin ng iba o inuulit
lang ng iba.
DEFINITION OF TERMS
Contribution Margin
 Sales less variable cost
 The amount a segment contributes to shoulder
the burdens/demands for fixed costs and profit
 Amount na pwedeng gamitin
pambayad sa fixed cost or pagbigay
ng return investments sa owner.
Traceable Fixed Cost
 Can be directly attributed to the segment
 Will disappear if the segment is eliminated
 Direkta siyang kaugnay ng isang
segment, kapag yung segment na
yon ay nawala or na shutdown
kasama nitong mawawala ang
traceable fixed cost.
Common Fixed Cost
 Cannot be directly attributed to the segment
 Will not disappear if the segment is eliminated
 Related siya hindi lang sa isang
segment kundi sa buong entity or
company. If ever isara mo yung isang
segment, hindi mababawasan o
maaalis yung commo fixed cost kasi
ng di naman siya directly related sa
iisang segment.
EXAMPLE:
 Suppose that a boarding house rents for P3,000
monthly plus P500 er head. Initially Aida, Lorna,
and Fe rented the house so each students is
computed as follows:
P3,000 / 3 + P500 = P1,500
 Total rent is P3,000 + P500 x 3 = P4,500
 Now assume that Aida left the boarding house for
good. Each student’s rental expense is computed
as P3,000 / 2 + P500 = P2,000
 Total rent is P3,000 = P500 x 2 = P4,000
 Aida’s P500 share in the per-head rent is traceable
fixed cost.
 The P3,000 monthly rent is a common fixed cost
since it did not decrease upon Aida’s departure.
PROBLEMS RELATED TO COST ASSIGNMENT
1. Omission of costs
 Some costs are treated as period costs rather
than a product cost.
 Sa pagsunod ng mga companies sa
GAAP sa pagpeprepare ng mga
Financial Statements, merong mga
cost na kahit related siya sa isang
product, nittreat siya as expense
hindi siya kasama sa Inventoriable
cost.
 Marketing, Research and Development
 Minsan na oommit sa computation or
sa paggawa ng segmented financial
statements yung mga cost na
ineexpense kahit na directly related
naman siya sa isang product.
 May lead to under-costing
 Kasi nga yung mga cost na related
naman sa isang segment ay hindi
naiisama sa paggawa ng segmented
financial statements, nagiging
common kahit sa totoong buhay ay
related naman talaga siya.
2. Inappropriate Cost Allocation Method
 Very common to entities not using ABC
 Example: allocating factory
maintenance expense on the basis of
direct labor hours
3. Arbitrary allocation of common costs
 Problem: Some common costs are not driven
by the segments
 Example: Property Tax
PROBLEM 1- REQUIREMENT 1 & 2
Requirement 1
Requirement 1

P75,000 x 40% = P30,000

(increase in sales - CM of cebu)

Requirement 2

A. GIVEN: Sales in Manila will increase to 50,000 next

year.

MANILA

 P200,000 (100%) SALES

 Sa given na 150,000 iaadd yung increase na
sales na 50,000
 P60,000 (30%) VARIABLE EXPENSES
 Dahil nga P200,000 na yung sales icocompute
yung 30% nito based dun sa given.
 P140,000 (70%) CONTRIBUTION MARGIN
 Idededuct yung sales at variable expenses
which is 200,000 - 60,000.
 P78, 000 (39%) TRACEABLE FIXED EXPENSES
 Nasa given siya, kaya lang naiba yung
percentage niya dahil nagbago rin yung
amount ng sales. That’s why 39%.
 P62,000 (31%) SEGMENT MARGIN
 Nideduct yung Contribution Margin sa
Traceable fixed expenses which means,
140,000 - 78,000.

CEBU

 Walang pagbabago. Kung ano lang yung nasa

given icocopy lang.

B.

 The segment margin ratio rise and fall due to the

presence of fixed costs. The fixed cost expenses
are spread over a larger base as sales increase.
 In contrast to the segment ratio, the contribution
margin ratio is a stable figure so long as there is no
change in either the variable expenses or the
selling price of a unit service.

PROBLEM 2- REQUIREMENT 1