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Cost Accounting--Ch. 22

STUDY
PLAY
Autonomy
The degree of freedom to make decisions.
Decentralization
The freedom for managers at lower levels of the organization to make decisions.
Dual Pricing
Approach to transfer pricing using to two separate transfer methods to price each transfer from one subunit to the other.
Dysfunctional Decision Making
Another term for suboptimal decision making. Dysfunctional Decision Making
Effort
Exertion toward achieving a goal.
Goal Congruence
Exists when individuals and groups work toward achieving the organization's goals. Managers working in their own best interest take actions that align with the overall goals of top management.
Incongruent Decision Making
Another term for suboptimal decision making. Incongruent Decision Making
Intermediate Product
Product transferred from one subunit to another subunit of an organization. This product may either be further worked on by the receiving subunit or sold to an external customer.
Management Control System
Means of gathering and using information to aid and coordinate the planning and control decisions throughout an organization and to guide the behavior of its managers and employees.
Motivation
The desire to attain a selected goal (the goal congruence aspect) combined with the resulting pursuit of that goal (the effort aspect)
Perfectly Competitive Market
Exists when there is a homogenous product with buying prices equal to selling prices and no individual buyers and sellers can affect those prices by their own actions.
Suboptimal Decision Making
Decisions in which the benefit to one subunit is more than offset by the costs or loss of benefits to the organization as a whole.
Transfer Price
Price one subunit (department or division) charges for a product or service supplied to another subunit of the same organization.