SmithCorporation manufacturers' doorswith wood andmetal frames. Smithhas three

departments: Glass, Wood and Metal. The Glass Department makes the door glass and sends

it to either the Wood or Metal Department where the glass is framed. The door is then sold.

Upper management sets the production schedules for the three departments and evaluates them

on output quantity, cost variances and product quality.

Required

Using academic literature together with any other articles and resources considered

appropriate, andyour own informedopinions, prepare apresentation that addressesthe

following:

1. What is a management control system and what is the goal of the system?

2. Outline what is meant by the term 'responsibility accounting' and what difficulties may

arise in operating a system of responsibility accounting?

3. How could the difficulties noted in requirement 2 be overcome?

In relation to the scenario above:

4. Are the three departments cost centres, revenue centres or profit centres?

5. Are the three departments centralised or decentralised?

6. Suppose the upper management of Smith Corporation decide to let the three

departmentsset their ownproduction schedules, buyand sell productsin external

markets, and have Wood and Metal negotiate with Glass for glass panes -

a. Will this change your answer to requirements 4 & 5?

b. How would you recommend upper management evaluate the three

departments if this change is made?

Note that it is not expected that equal time should be spent addressing each of these questions.