1. What is meant by the term decentralization?
2. What is a segment of an organization? Give several examples of segments.
3. What costs are assigned to a segment under the contribution approach?
4. Explain how the segment margin differs from the CM.
5. Why aren't common costs allocated to segments under the contribution approach?
6. How is it possible for a cost that is traceable to a segment to become a common cost if the segment is divided into further segments?
7. Identify three inappropriate methods for assigning traceable costs among segments.
8. Identify three types of responsibility centres, and describe how performance is mea- sured for each one.
9. What is meant by the terms margin and turnover?
10. What are the three approaches to improving ROI?
11. What is meant by the term residual income?
12. In what way can the use of ROI for investment centres lead to bad decisions? How does the residual income approach overcome this problem?
13. Should residual income be used to compare divisions of different sizes? Why or why not?
14. What are the four groups of performance measures typically included in a balanced scorecard?