1. Explain how centralized and decentralized companies dif-fer. What are the advantages and disadvantages of each! 2. Why does decentralization create the need for responsibil-ity accounting in an organintion? 3. What is the controllability principle and why is it crucial to responsibility accounting! 4. Name the four types of responsibility centers and describe the managers' responsibilities and authority in each. 5. Briefly explain the difference between segment margin and net operating income. 6. Why are profit center managers evaluated on segment margin instead of net operating income! 7. How do investment center managers differ from profit center managers! & What role do return on investment and residual income play in responsibility accounting? 9. Return on investment may bc separated into two compo-nents. Name them and describe what each can tell you. 10. Explain how relying on return on investment for perfor-mance evaluation of investment center managers could lead to goal incongruence.
15. Other than the one(s) mentioned in the text, give an example of an action that management might take to improve financial performance in the short run that could prove detrimental in the long run. 16. Explain the balanced scorecard approach to performance evaluation. What advantages does this approach have over using only financial measurements! 17. What are the four dimensions of a balanced scorecard? What does each dimension represent! 18. Why most a company consider its incentive and reward system when implementing a balanced scorecard approach! 19. Why are incentive systems that emphasize longterm performance more consistent with a balanced scorecard approach! 20. What is a trander price? 21 Explain why two managers employed by the same com-pany may be diametrically opposed to each other when considering a transfer price. 22. Explain the meaning of minimum and maximum transfer prices and identify who (the buyer or the seller) would determine each.