Reference no: EM132802489

Question - Haida Ltd. manufactures a wide variety of products in multiple locations throughout North America. Its head office is in Vancouver, B.C. and it has a decentralized management structure. The Consumer Products Division is located in Ontario and is responsible for the production of a variety of household products which are then sold to retail companies through the sales staff within the Marketing Division.

Performance within the Consumer Products is monitored through variance analysis. Direct materials, direct labour and manufacturing overhead variances are calculated at the end of each month and this information is provided to both the Production Managers within the Consumer Products Division and to the Vice-President Manufacturing, who oversees all manufacturing divisions within the company. Other manufacturing divisions include the manufacture of car parts in the eastern United States, clothing manufacture in the southern United States, seafood and other food processing in the Atlantic provinces in Canada, and lumber products in both western Canada and western United States.

Required -

a) Describe three advantages to using a decentralized decision-making structure within Haida.

b) What type of responsibility centre is the Consumer Products Division? Provide one reasonable explanation for why this type of responsibility centre would be selected for this division.

c) Is it possible to evaluate the Consumer Products Division as a profit centre? Identify one advantage and one disadvantage to classifying this division as a profit centre.

d) Haida has adopted a management by exception philosophy. Would you recommend using ideal or practical standards for variance analysis in this situation? Provide three relevant factors to support your recommendation. Make sure your answer makes it clear what the difference is between ideal and practical standards.