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Segment Reporting and Profitability Analysis-Segmented Income Statements: Learning Objectives: What is segment reporting managerial accounting ? How are segmented income statements prepared? A different kind of income statement is required…
Return on Investment (ROI) and Balanced Scorecard: Simply exhorting managers to increase return on investment (ROI) is not sufficient. Managers who are told to increase return on investment (ROI) will…
Transfer at Cost to the Selling Division: Many companies set transfer prices at either the variable cost or full (absorption) cost incurred by the selling division. Although the cost approach…
Residual Income-A Method to Measure Managerial Performance: Definition and explanation of residual income method: Residual income is the net operating income that an investment center earns above the minimum required…
Learning Objectives: Define and explain traceable and common fixed costs or expenses. What is the difference between traceable and common fixed costs? The most puzzling aspect of segmented income statements…
Set Transfer Price at Market Price: Some form of the competitive marketed price (i.e., the price charged for an item on the open market) is often regarded as the best…
Segmented Financial Information on External Reports: The Financial Accounting Standards Board (FASB) now requires that companies in the united states include segmented financial and other data in their annual reports…
Return on Investment (ROI) Method for Measuring Managerial Performance: In a truly decentralized company, segment managers are given a great deal of autonomy. Profit and investment centers are virtually independent…
Divisional Autonomy and Sub-optimization: How much autonomy should be granted to divisions in setting their own transfer prices and in making decisions concerning whether to sell internally or to sell…
Limitations, Criticism or Disadvantage of Residual Income Method: The residual income approach has one major disadvantage. It cannot be used to compare the performance of divisions of different sizes. You…
Negotiated Transfer Pricing: Definition and Explanation of negotiated transfer pricing: A negotiated transfer pricing results from discussions between the selling and buying divisions. Negotiated transfer prices have many important advantages.…
International Aspects of Transfer Pricing: The objective of transfer pricing change when multinational corporations involved and the goods and services being transferred cross international borders. The objectives of international transfer…
Criticism/Disadvantages or Limitations of Return on Investment (ROI) Method of Performance Evaluation: Learning Objectives: What are the limitations of return on investment method of performance evaluation? Although the return on…
Hindrances/Problems to Proper Cost Assignment in Segmented Reporting: For segment reporting to accomplish its intended purposes, costs must be properly assigned to segments. If the purpose is to determine the…
Methods of Controlling and Improving the Rate of Return on Investment (ROI): Return on investment is normally used to judge the managerial performance in an investment center. Managers therefore try…
Decentralized Organization Definition: An organization in which decision making is not confined to a few top executives but rather is spread throughout the organization.
Decentralization in Organizations: Learning Objectives: Define and explain the term "decentralization". What are the advantages and disadvantages of decentralization in business organizations? What are business segments? Define and explain cost,…
Decentralization and Segment Reporting: When an organization grows beyond a few people, it becomes impossible for the top manager to make decisions about everything. Managers have to delegate decisions to…
Shamsa Rafique 
Abida Rehman 
Sidra Farid 
Sana Ahmed 
Rubab Ali