PROBLEM 12-41 AND PROBLEM 13-42 1
Problem 12-41 Designating Responsibility Centers and Problem 13-42 ROI and Residual Income
Grand Canyon University: ACC650
, PROBLEM 12-41 AND PROBLEM 13-42 2
Problem 12-41 Designating Responsibility Centers
To: Waikiki Sands Hotel General Manager
From: Samantha Langevin, Consultant
Subject: Responsibility-center Designation
First and foremost, it is vital to understand responsibility accounting and what a
responsibility center is. Responsibility accounting refers to the various concepts and tools used
by managers to measure the performance of people and departments in order to foster goal
congruence (Hilton, 2016, pg. 540). As for a responsibility center, it can be defined as a subunit
in an organization whose manager is held accountable for specified financial results of the
subunit’s activities (Hilton, 2016, pg. 540). Responsibility centers have four common types,
which are as follows: Cost Center, Revenue Center, Profit Center, and Investment Center(Hilton,
2016, pg. 540).
The Waikiki Sands Hotel is a subunit of the Aloha Hotels and Resorts, Inc. As a subunit the
Waikiki Sands Hotel is considered a profit center. A profit center is an organizational subunit
that is responsible for costs and revenues, but not investments in assets("Maintaining Control
Over Decentralized Organizations," n.d.).The investment center in this organization would be
Aloha Hotels and Resorts, Inc. This is the organizational subunit that is responsible for the cost,
revenues, and investments in assets for the organization as a whole. After reviewing your
company’s organizational chart, my recommendation is that each of the following subunits be
designated as the following responsibility centers.
Problem 12-41 Designating Responsibility Centers and Problem 13-42 ROI and Residual Income
Grand Canyon University: ACC650
, PROBLEM 12-41 AND PROBLEM 13-42 2
Problem 12-41 Designating Responsibility Centers
To: Waikiki Sands Hotel General Manager
From: Samantha Langevin, Consultant
Subject: Responsibility-center Designation
First and foremost, it is vital to understand responsibility accounting and what a
responsibility center is. Responsibility accounting refers to the various concepts and tools used
by managers to measure the performance of people and departments in order to foster goal
congruence (Hilton, 2016, pg. 540). As for a responsibility center, it can be defined as a subunit
in an organization whose manager is held accountable for specified financial results of the
subunit’s activities (Hilton, 2016, pg. 540). Responsibility centers have four common types,
which are as follows: Cost Center, Revenue Center, Profit Center, and Investment Center(Hilton,
2016, pg. 540).
The Waikiki Sands Hotel is a subunit of the Aloha Hotels and Resorts, Inc. As a subunit the
Waikiki Sands Hotel is considered a profit center. A profit center is an organizational subunit
that is responsible for costs and revenues, but not investments in assets("Maintaining Control
Over Decentralized Organizations," n.d.).The investment center in this organization would be
Aloha Hotels and Resorts, Inc. This is the organizational subunit that is responsible for the cost,
revenues, and investments in assets for the organization as a whole. After reviewing your
company’s organizational chart, my recommendation is that each of the following subunits be
designated as the following responsibility centers.
