a) Centralized system In this case the duty and responsibility of purchasing is done by one purchaser is purchasing department.
b) Decentralized system the duty and responsibility of purchasing is placed with individual branch department or geographical department.
Advantages of centralized system
i) Less expensive since few activities are concentrated in one department.
ii) There is better control because of effective and efficient monetary.
iii) There is more accountability.
iv) There is bulk buying hence economies of scale are enjoyed.
v) Fewer staffs are employed.
vi) There is expertise in buying due to specialization.
N/B: The advantages of centralization are the disadvantages of decentralization.
Advantage decentralization
i) Reduces risk since purchasing is spread to many department.
ii) It is specialized in terms of specific material requirement.
iii) There is accountability.
iv) Less bureaucratic.
v) There are 6 minimum production breakdown due to the short time required in having the materials.
N/B: The advantages of decentralized are the disadvantages of centralization
Wilfykil answered the question on August 5, 2019 at 09:24
- Give the Steps followed in Procurement of Materials(Solved)
Give the Steps followed in Procurement of Materials
Date posted: August 5, 2019. Answers (1)
- List the Concepts of Cost accounting(Solved)
List the Concepts of Cost accounting
Date posted: August 5, 2019. Answers (1)
- What is the definition of:
1. Cost
2. Cost units(Solved)
What is the definition of:
1. Cost
2. Cost units
Date posted: August 5, 2019. Answers (1)
- Discuss the term "Management Accounting"(Solved)
Discuss the term "Management Accounting"
Date posted: August 5, 2019. Answers (1)
- What is the difference between financial accounting and cost accounting?(Solved)
What is the difference between financial accounting and cost accounting?
Date posted: August 5, 2019. Answers (1)
- What is the meaning of Financial accounting?(Solved)
What is the meaning of Financial accounting?
Date posted: August 5, 2019. Answers (1)
- Discuss Cost accounting and control(Solved)
Discuss Cost accounting and control
Date posted: August 5, 2019. Answers (1)
- Discuss the definition of and Scope of Cost Accounting(Solved)
Discuss the definition of and Scope of Cost Accounting
Date posted: August 5, 2019. Answers (1)
- Explain the Cost of Redeemable Debentures and Preference Shares(Solved)
Explain the Cost of Redeemable Debentures and Preference Shares
Date posted: August 5, 2019. Answers (1)
- Which are the Methods/models of Computing Cost of Capital?(Solved)
Which are the Methods/models of Computing Cost of Capital?
Date posted: August 5, 2019. Answers (1)
- Highlight the importance of Cost of Finance(Solved)
Highlight the importance of Cost of Finance
Date posted: August 5, 2019. Answers (1)
- What is meant by "Cost of Retaining Finance"?(Solved)
What is meant by "Cost of Retaining Finance"?
Date posted: August 5, 2019. Answers (1)
- What is the meaning of the term "Cost of Finance"?(Solved)
What is the meaning of the term "Cost of Finance"?
Date posted: August 5, 2019. Answers (1)
- Give the factors that affect Capital Structure(Solved)
Give the factors that affect Capital Structure
Date posted: August 5, 2019. Answers (1)