alleryStart learning →Why is consistency hard to ensure in a decentralized organization?
ADistribution is centralised
BDecision-making is delegated
CDepreciation is recalculated
DDocumentation is duplicated
Answer & Solution
Correct answer: B. Decision-making is delegated
1. Consistency is easy when one person decides everything.
2. Decentralization deliberately gives that decision away.
3. Because decision-making is delegated, it is difficult to ensure all segments work consistently.
4. The strategic goals then have to be actively held in common.
_Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 9 'Responsibility Accounting and Decentralization', sections 9.1-9.4_
Keep practising Responsibility Accounting
Browse all Responsibility Accounting questions for US CMA Part 1, or explore more Management Accounting topics.
Related questions
Set the return on investmentCost centre and revenue centreKnock out the centralized traitsCentralized or decentralizedSort the responsibilitiesThe purpose of identifying distinguishable segments is efficiency in decision-making and:Which responsibility centre answers for revenues, costs and capital together?A named risk of decentralization is that division managers may prioritise: