Reference no: EM132208908

The following quotation is from an address made by an officer of the British Motor Company: We can all, I think, take pride in the way cost accounting has kept pace with business development in this country. Tremendous strides have been made during the last quarter of a century, and I’m sure that much more progress will be made in the future. In fact, progress will have to be made if we are to keep the science of management accounting abreast of the times. The whole of industry is now operating on a different level than we have known before— a higher plateau, on which management accounting appears in a new light and becomes more and more significant as a factor in business management.

Required

1. What do you think is meant by the statement that “the whole of industry is now operating on a different level than we have known before— a higher plateau . . .”?

2. (a) What are the advantages of each region, division, and activity having its own accounting functions? Does this pose any ethical challenges?

(b) Are there any areas of responsibility of the CFO described in Chapter 1 that you would not transfer to the local accounting organization?

3. Draw three boxes on an organizational chart, one each for the corporate controller, the plant controller, and the plant manager. Draw appropriate lines between the boxes that would accord with the system described in the quotation. Use a dashed line to denote “staff management” relationship and a solid line to denote “line management” relationship. Describe some major advantages and complications of the new organization arrangements.

4. The plant controller must frequently fulfill two roles simultaneously, as a helper of the plant manager and as a spy for the corporate controller. How can accountants’ duties be organized to cope with these conflicting roles?