In 2002, Emily Tong and Mike Wallace set up EM Design and Manufacturing (''EM'') to make and sell singlets, shorts, handkerchief and other personal clothing. After an initial success, the company has expanded to several items including winter thermal clothing and socks. The company has built up a reputation for producing quality products at competitive prices. In order to lower the purchase cost, EM procured its required fabric from suppliers in quantities large enough to enjoy a good amount of discount. However, recently it has been difficult for EM to source for fabric of good enough quality at prices low enough for EM to continue its competitiveness. Eventually in 2012 after ten years of incorporation, EM acquired Easy-fabric Limited, one of its fabric suppliers. Hence, EM was organized into three divisions: PCL Division (Personal Clothing division), TWL Division (Thermal Wear division) and EFL Division (Easy-fabric Limited). EM's sole purpose of acquiring EFL is to secure and enhance its key raw material (i.e. fabric). Hence EFL produces only for PCL Division and TWL Division. However, managers of both PCL and TWL maintained their decision-making authority to purchase from external suppliers if it is cost beneficial to do so. EM believes that this may drive EFL to remain competitive. The managers of all the three divisions have been authorized by EM's board of directors to make all decisions related to their respective divisions as long as the decisions are in line with the best interests of EM as a whole. Both PCL and TWL divisions are designated as investment centres and the managers are awarded the appropriate bonuses based on the performance of the divisions.

Required:

(a) Using the information given in the question, discuss the competitive advantage of EM Design & Manufacturing.

(b) In order to implement an appropriate management accounting system, it is necessary to understand the key success factors of EM Design & Manufacturing. Explain.

(c) Explain fully whether EM Design & Manufacturing is operating under a centralised or decentralised organizational structure.

(d) Explain fully whether EFL Division should be treated as a profit centre or engineered cost centre or a discretionary cost centre?