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Lecture Fundamentals of cost accounting - Chapter 12: Fundamentals of management control systems. In the previous chapters we considered how information could be developed to help managers make decisions. In this chapter we will discuss the fundamentals of management control systems. | Fundamentals of Management Control Systems Chapter 12 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin In the previous chapters we considered how information could be developed to help managers make decisions. In this chapter we will discuss the fundamentals of management control systems. Alignment of Managerial and Organizational Interests L.O. 1 Explain the role of a management control system. A management control system is designed to help managers make decisions that will increase the organization’s performance. 12 - A management control system is designed to influence subordinates to act in the organization’s interest. Decentralized Organizations L.O. 2 Identify the advantages and disadvantages of decentralization. Decentralization is the delegation to subordinates of authority to make decisions in the organization’s name. 12 - In a decentralized organization, subordinates have the authority to make decisions in the organization’s name. The more decentralized the organization, the further down the organization chart decisions are made. Advantages of Decentralization LO2 Better use of local knowledge Faster response Wiser use of top management’s time Reduction of problems to more manageable size Training, evaluation, and motivation of local managers 12 - Moving the decision-making authority to lower levels of management has some advantages. Local managers close to the decision in question have information about the conditions related to the decision and can react more quickly than top managers who may be removed from the information. Allowing the managers close to the issues to make decisions results in job satisfaction for the managers. Also, having local managers make some decisions frees top managers’ time allowing them to focus on strategically related issues. Disadvantages of Decentralization LO2 Dysfunctional decision making: Local managers can make decisions in their interest, which . | Fundamentals of Management Control Systems Chapter 12 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin In the previous chapters we considered how information could be developed to help managers make decisions. In this chapter we will discuss the fundamentals of management control systems. Alignment of Managerial and Organizational Interests L.O. 1 Explain the role of a management control system. A management control system is designed to help managers make decisions that will increase the organization’s performance. 12 - A management control system is designed to influence subordinates to act in the organization’s interest. Decentralized Organizations L.O. 2 Identify the advantages and disadvantages of decentralization. Decentralization is the delegation to subordinates of authority to make decisions in the organization’s name. 12 - In a decentralized organization, subordinates have the authority to make decisions in the .
