ACC206B Ch. 10

  1. What is a centralized organization
    an organization where decisions are made by a particular group for the entire company (decentralized - decisions are made moreso by the department managers)
  2. What is Agency Theory
    an analysis of one party's delegation of authority over another party in terms of decisions to be made.
  3. ROI (Return on Investment) =
    income / investment = a %
  4. ROS (Return on Sales) =
    Net Operating Income (Profit) / Sales (Revenue)
  5. Capital Turnover =
    Sales (Revenue) / Investment
  6. What is another name for Investment?
    Average operating asset
  7. Economic Profit (or Residual Income or RI) =
    Net Operating Income - ( Min required ROI (or cost of capital) x investment )
  8. NOPAT =
    Net operating profit after tax
  9. gross book value is
    the original cost of an asset
  10. net book value is
    the original cost of an asset less ad accumulated depreciation
  11. transfer pricing is
    the price that it costs a company to purchase between its own departments
  12. What is the general rule for transfer pricing?
    Transfer Price = Outlay Cost + Opportunity Cost
  13. what are dysfunctional decisions
    decisions in conflict with the company's goals
Card Set
ACC206B Ch. 10
vocab and stuff from chapter 10