What is the difference between a departmental accounting system and a responsibility accounting system? Are the reports of departmental net

What is the difference between a departmental accounting system and a responsibility accounting system? Are the reports of departmental net income and the departmental contribution to overhead useful in assessing a department manager’s performance? Explain

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  1. Answer:

    Part 1

    Department Accounting system seeks to establish the Departmental Economic Performance whilst the Responsibility Accounting System seeks to establish the Performance of Personnel Responsible for a particular department.

    Part 2

    No, reports of departmental net income and the departmental contribution to overhead are not useful in assessing a department manager’s performance.

    Because, they take into account those incomes and costs attributable to the particular department including central costs. This means it ignores whether or not the costs were wholly controllable by the manager.

    Explanation:

    Department Accounting system seeks to establish the Departmental Economic Performance whilst the Responsibility Accounting System seeks to establish the Performance of Personnel Responsible for a particular department.

    The reports of departmental net income and the departmental contribution to overhead are not useful in assessing a department manager’s performance this is because they take into account those incomes and costs attributable to the particular department including central costs. This means it ignores whether or not the costs were wholly controllable by the manager.

    In assessing a department manager’s performance, we look into incomes and expenses that were sorely within their control other than those items that are just attributable to the department they are responsible for.

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