Importance As an organization grows, its customer-base size and locations, product and service offerings, level of technology, distribution channels and number of employees change, duties are divided and spheres of responsibility are created that eventually become centers of responsibility. To cope with such changes, managers must recognize when and how the company's authority structure should be altered to support decision making, communication, and employee motivation. Objectives The objective is to show that it is essential to develop a cost-assigning model amongst cost-incurring areas in order to analyze, evaluate and control an entity's performance more sufficiently, as well as its production and nonproduction departments. Methods The article illustrates a case study of responsibility accounting process using cost accounting tools, and presents a responsibility accounting approach for wineries with different organizational structures. Results The paper presents the peculiar factors underlying cost accounting organization, as well as cost allocation methods in wine-making industry; details a framework of responsibility accounting considering international outlook; outlines production and service departments cost allocation as well as responsibility centers classification with attached numerical codes based on a winery's hierarchy; includes recommendations on how to treat overhead costs assigned to activities as responsibility centers. The developed recommendations may be used to create a system of generating information about costs by business units to improve the accounting model's efficiency employed in wineries. Conclusions and Relevance I conclude that since some produce do not undergo a full production cycle, i.e. cost-incurring areas, an appropriate cost-assigning method is more accurate in reflecting the actual efforts associated with production, which, in turn, ensures product-costing accuracy.
Keywords: responsibility accounting, responsibility center, decision-making, cost base, winery
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