Tutorial | October 2004 (Revised January 2006)

Introduction to Responsibility Accounting Systems

by David F. Hawkins, V.G. Narayanan, Jacob Cohen and Michele Jurgens


Responsibility accounting systems generate financial and related nonfinancial information about the actual and planned activities of a company's responsibility centers--organizational units headed by managers responsible for a unit's performance. The principal components covered are budgets, performance reports, variance reports, and transfer prices. Describes these components and walks students through how a responsibility center's actual performance is compared to its planned (budgeted) performance and how resources can be transferred from one center to another. Also explains the management planning and control process. Provides numerous exercises to test understanding of the material.

Keywords: Business or Company Management; Cost Accounting; Governance Controls; Financial Reporting; Performance Evaluation; Budgets and Budgeting; Planning;


"Introduction to Responsibility Accounting Systems." Harvard Business School Tutorial 105-703, October 2004. (Revised January 2006.)