Answer (A) is correct . A well-designed responsibility accounting system establishes responsibility centers within an organization. Managerial performance should be evaluated only on the basis of those factors controllable by the manager. Managers may control revenues, costs, and/or investment activities. The responsibility system should induce management performance that adheres to overall company objectives. Charging the costs of a rush order to the sales manager who authorized the job creates an incentive for that individual to minimize such costs.
Answer (B) is incorrect because Functional accounting accumulates costs and assets for each service provided or function performed, without necessarily assigning responsibility for such costs.
Answer (C) is incorrect because A transfer-pricing system charges one segment of an organization for goods and services that are provided by another segment within the organization.
Answer (D) is incorrect because Contribution accounting emphasizes variable costs and their relationship with revenues, but disassociates fixed costs from the departments responsible.
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