Choices in financial control Bennington Home Products sells home prod¬

ucts. It buys products for resale from suppliers all over the world. The products are organized into groups. A few examples of these groups are floor care prod¬ ucts, kitchen products, tool products, and paper products. The company sells its products all over the world from regional offices and warehouses in every country where it operates. Because of differences in culture and taste, the product lines and products within those lines vary widely among countries.

The regional offices have administrative staff that manage the operations, do the ordering, and undertake the usual office administrative functions, and a sales staff that does the selling directly to stores within that country. The re¬ gional offices are evaluated as investment centers because they have responsi¬ bility for revenues, costs, and investment levels. The regional offices make suggestions for new products.

The corporate office manages the regional offices and places the orders re¬ ceived from the regional offices with suppliers. The corporate office does the ordering for three reasons. First, it is believed that one ordering office elimi¬ nates duplication in ordering activities. Second, it is believed that one office ordering for all the regional offices gives the organization more power when dealing with suppliers. Third, it is believed that one office can develop the ex¬ pertise to find and negotiate with suppliers of unique and innovative products.

REQUIRED

(a) Describe an appropriate system of financial control at the regional level.

(b) Describe an appropriate system of financial control at the corporate office level.

(c) Explain why the three systems of financial control should, or need not, mesh.

(LO 1)