Responsibility accounting aims at collecting and reporting costing information
Cost centre-wise
Responsibility accounting collects and reports costs (and, where relevant, revenues and investment) according to the person responsible for them. Each manager is held accountable only for the items they can control.
The unit of reporting is the responsibility centre: a cost centre, profit centre or investment centre. In costing terms, costs are accumulated cost centre-wise, and each centre's manager receives reports comparing budgeted and actual controllable costs.
A department is often a responsibility centre, but the concept is defined by the area of control (the cost centre), not by the organisational department as such. Function-wise reporting groups costs by activities such as production or selling, and product-wise reporting is for product costing. Neither fixes personal accountability.
Hence, Cost centre-wise.
Important Questions from Cost and Management Accounting
Match List I with List II
List I
(Type of Costing)
List II
(Description)
A. Marginal Costing I. Integrated approach to determine product features, product price, product costs and product design that helps ensure a company to earn reasonable profit on new products. B. ABC Costing II. The amount of any given volume of output by which the aggregate costs are changed if the volume of output is increased by one unit. C. Target Costing III. Used when identical units are produced through an on-going series of production steps. D. Process Costing IV. Costing system in which costs being with tracing of activities and then to producing the product. Choose the correct answer from the options given below:
Which one of the following is PV ratio for the company?
Which one of the following is the break-even point in units for the company?
Which one of the following is the break-even point in terms of rupees?
Which one of the following is desired sales volume in units to earn a profit of Rs. 60,000?
