Responsibility Accounting, Quality Control, and Environmental Cost Management

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12
Chapter Twelve

• Responsibility Accounting, Quality Control, and
  Environmental Cost Management

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Responsibility Centers

• Cost Center
• Segment has control over the incurrence of
  costs.

The Paint Department in an automobile plant.
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Responsibility Centers

• Profit Center
• Segment has control over both costs and
  revenues.

Company-owned restaurant in a fast-food chain.
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Measuring Management Performance
Evaluation Tool
Cost standards
Contribution income statement
Rate of return on invested funds or residual
income
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Segmented Reporting
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Key Features of Segmented Reporting

• Contribution format.
• Controllable versus uncontrollable expenses.
• Segmented income statement.

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Total Quality Management
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Total Quality Management
Ranking between products or services having the
same functional use.
Degree to which actual product or service
meets its design specs. and is free of mfg.
defects.
Quality of Design
Quality of Conformance
Grade
Judged by . . .
Requires a certain . . .
Must be sup- ported by . . .
Product meets customer expectations for the grade
level chosen.
Customers
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Traditional Perspective of Product Quality
Total Quality Costs
Costs
Prevention and Appraisal Costs
Failure Costs
Percentage of Defective Products
0
100
Minimum
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ISO 9000 Standards

• The International Standards Organization (ISO),
  require that a manufacturer have a well-defined
  quality control system in place, and that the
  target level of product quality be maintained.
• Sustain quality of product.
• Effective quality control system in place.
• Provide purchaser confidence in the product.

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End of Chapter 12