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Responsibility accounting

Large organizations have operating activities which are voluminous. Controlling such activities
in details & in every sphere is not possible for the top management. The top management has the
total authority & responsibility. For the purpose of controlling efficiently, the total authority &
responsibility is decentralized by forming small segments which are called responsibility centers
& to these centers, specific costs & revenues are allocated. The evaluation of performance of
each responsibility center is done at the periodical intervals on the basis of pre-determined

Responsibility accounting may be known as decentralization of responsibility center so that

desired control can be ensured & thereby the goal of the organization can be attained.
Responsibility accounting involves the following:

Entire organization is divided into small responsibility centers;

In terms of revenues & costs, the responsibility of each responsibility center is fixed;
In terms of its predetermined target, the performance of each responsibility center is

Pre-requisites of effective responsibility accounting:

The pre-requisites of the effective responsibility accounting are the following:

Under the supervision of a manager should be each responsibility center & for the
purpose of operating, it must be separable & identifiable.
The independent measurement of performance of each center must be capable of being
Each responsibility center should have clearly set targets.
Each responsibility centers budget should set targets which should be neither too high
nor too low i.e., the budget should be one which can be realised.
The top management should fully support the system.
All managers of responsibility centers should participate in the formulation of plans &
policies relating to responsibility centers for the purpose of providing motivation.
For sincere performance of each responsibility center the organizational environments
must be conducive.

Objectives of Responsibility Accounting:

The objectives of responsibility accounting are the following:

Overall organizational goals are broken down into small goals, each of the small goals is
meant for better achievement of a responsibility center.
With the attached responsibility each responsibility center is tied up & there is adequate
authority so that responsibility can be discharged.
At the end of a period, evaluation is done of the performance of each responsibility center
& comparison of the performance is done with the predetermined targets.
Thorough study is made of the achievements which are above or below the targets &
remedial measures are adopted.
Assessment is made of the contribution made by each responsibility center &
examination is done of how far its possible for the contribution to fulfilling its share in
the ultimate organizational growth.
Emphasize is given on the control of cost through planning.
Use is made of the principle of management by exception for the purpose of recording
only those data where the actual performance of responsibility center falls short of the set
target & where the variance is beyond the reasonable limit.

Advantages of Responsibility Accounting:

For the purpose of exercising control, responsibility accounting is an important tool in the
hands of management. For the purpose of effecting efficient control on operations & achieving
the organizational goal, responsibility accounting system should be introduced by the
organizations which have large dimensions & complex & operations which are decentralized.

Since for the purpose of achieving the overall goal in a piecemeal way; to various
responsibility centers, overall responsibility & authority are decentralized, continuous
communication should be there between the overall responsibility center & various sub-
responsibility centers. Thus a communication system is automatically established by
responsibility accounting.

Allocation is made of all the activities of the organization, all the items of income &
expenditure including capital expenditure to the well defined responsibility centers. Profit of
each responsibility center is also identified. It should be understood by the manager of the centre
what has to be performed by him with what resources & in what time period. He gets the things
done by making his own way without any interference. Thus much importance is given to human

The managers of responsibility centers worked independently which helps in achieving

the ultimate goal.
There is a relationship between efforts & achievement, thereby, loopholes, if any, in the
operations gets easily detected.
The overall goals of the organization & individual goals of responsibility centers are
communicated to all so that by keeping a view on that, guidance can be given the
managers in their respective centers to the operations.
Among the managers & their subordinates, cost-consciousness gets generated which
results in automatically reducing cost.
It becomes easy to detect the weak areas in the organization. So for the purpose making
the weak areas strong, corrective measures are taken.
By recording the negative variances between the actual performance & target,
introduction of management by exception can be done.
For the purpose of exercising best managerial control over the affairs of the organization
& achieving the desired goal, responsibility accounting system & budgetary control
system can work together.
As realistic goals are fixed for a responsibility centre, its achievement by the employees
becomes easy. Their contribution can be assessed by themselves for the purpose of
achieving the goal of the organization as a whole. A sense of belonging to the
organization is created among the employees by the systematic responsibility accounting
as the reward of the employees for accomplishment is not unsatisfactory.
As managers of responsibility centers are allowed to sit with the top management for
exchanging of views & opinions, appropriate decision making is almost assumed.
As against expected advantages there are also some apprehended disadvantages.

Disadvantages of Responsibility Accounting:

Solely upon the sincere efforts put in by the managers of the responsibility centers, the
success of the responsibility accounting depends. Whether the system will succeed or not
shall be decided by the personal factors of the managers.
The place of good management cannot be ever taken by the responsibility accounting
because the latter is only a tool in the hands of the former.
Although theoretically, the manager of each organization is given free hand, in actual
practice, neglect of employees reaction, interference etc. is often noticed. Thus, in the
way of proper discharging of responsibility, this stands.
In modern organizations, among the departments, inter-relations & inter-departments are
mostly observed. So it becomes almost impossible to demarcate responsibility centers by
clear-cut outlines.
Manager of the responsibility center prepares & communicates performance reports. The
desired result will not be achieved by the responsibility accounting system, if there is any
shortcoming in the report.
Remuneration, future prospects, rewards, good working condition, welfare work & many
others account for the individual interest of employees. Co-operation from the employees
may be required where there is a clash between individual interest & the organizational

Concept of Responsibility Centers:

Any organizational or functional unit headed by a manager who is responsible for the activities
of that unit is called a responsible center. The manager is responsible or accountable for the
accomplishments of the tasks set in his unit.

The total organizational task is divided into sub-tasks, which are performed by different
departments. In this sense, all departments in an organization are responsibility centers. All
responsibility centers use resources [inputs or costs] to produce something [output or revenues].
Typically responsibility is assigned to a revenue, expense, profit and/or investment center. The
decision usually will depend on the activity performed by the organizational unit and on the
manner in which inputs and outputs are measured by organizational control system.

The organizational chart shows the sub-tasks being performed by different departments and also
the tasks to be performed by each responsibility center. The size of the responsibility center will,
however, is determined by the nature of the task, technology, people and the level in the
organization hierarchy. From the top management point of view, a division is a responsibility
center, from the divisional managements point of view; the market department of that division is
a responsibility center. And from the marketing managers point of view, the sales, distribution,
and advertising departments are responsibility centers.
Types of Responsibility Centers:
[a] Revenue Center,

[b] Expense center,

[c] Profit center, and

[d] Investment Center.

(a) Revenue Centers:

Revenue centers are those organizational units or segments in which outputs are measured in
monetary terms but are not directly compared to input costs. The main focus of managements
efforts will be on revenue generated by it. A sales department is an example for a revenue center.

The effectiveness of the center is not judged by how much sales revenue exceeds the cost of the
center. Rather budgets [in the form of sales quotas] are prepared for the revenue center and the
budgeted figures are compared with the actual sales.

Generally the costs are not related to output. However, this does not mean that efforts are not
taken to control costs in revenue centers. Though the managements main focus is more on
revenues, necessary attempts are made to control costs.

(b) Expense Centers:

In expense centers, inputs [cost and expenses] are measured in monetary terms but outputs are
not. The main focus of the management will be on the control of the expenses or costs incurred
by the responsibility center. So budgets will be devised only for the input portion of these
centers operations. Organizational units commonly considered expense centers include
administration service, and research departments.

There are two types of expense centers namely engineered expense/costs center and discretionary
expenses/costs center. Engineered costs are those for which costs can be estimated with high
reliability based on the engineering or technical relationship that exists between costs and output;
for example the cost of direct materials or direct labour.

Discretionary costs are those for which costs cannot be reliably estimated before hand and must
depend to a large extent on the managers discretion. In other words, it is not possible to
determine the optimum relationship between costs and outputs and the choice of relationship is
quite often highly subjective and is left to the discretion of the manager.

For example, the amount spent on advertising, welfare schemes, management training, etc.,
cannot be determined objectively. The management has to make a judgment as to the right
amount of such costs in a given situation subjectively. The discretionary costs can be varied at
the discretion of the manager of the responsibility center. There is no scientific way of
determining the right amount. Other examples of discretionary costs centers are the accounting
department, personnel department, research and product development, and so on.
In the case of engineering costs center the objective is to reduce costs as far as possible
consistent with quality and safety standards. The budgeted costs are calculated using the
technical relationship for the actual level of output. Hence, the performance can be evaluated by
comprising the actual costs incurred with the budgeted costs.

The manager in charge of the center is responsible for both levels of budgeted output as well as
cost efficiency. The costs should be reduced without sacrificing the quality. Traditionally, the
focus of cost accounting has been on developing suitable systems for measurement of
performance of engineered cost centers.

The performance of a discretionary cost center is also evaluated by comparing the actual
expenses with budgeted expenses. However, the performance evaluation is on the basis of the
managers ability to spend on the amount agreed upon. The actual should not exceed budget
commitment without the knowledge of the manager. This system motivates managers to keep
expenses within the budgeted level.

However, difficulties may arise in the measurement of efficiency or effectiveness since the
output cannot be measured in monetary terms. Further it is difficult to set cost standards and
measure financial performance against these standards. In an attempt to reduce costs, the
divisional manager may cut costs by ignoring maintenance or avoiding training. But it may not
be good for the company.

Similarly, the marketing manager may cut costs by reducing sales promotional and advertising
expenses. But this may affect the sales and profitability of the concern in the long run. Thus, the
conflict between short-run goal [cutting costs] and long-run goal [improving profitability]
assumes particular importance in the evaluation of the performance of discretionary cost centers.

(c) Profit Center:

A profit center generally refers to a segment of an organization that generates revenue. It is a
responsibility center, the manager of which is responsible for the amount of profits earned. In a
profit center, performance is measured by the numerical difference between revenues [outputs]
and expenditures [inputs].

The managers in the profit center are therefore, responsible for both revenues and costs. Such a
measure is useful to determine the economic efficiency of the center and individual efficiency of
the manager in charge of the center. A profit center is created whenever an organizational
segment [division/department] is given responsibility for earning a profit. In departmentalized
organization in which each of the number of segments is completely responsible for its own
product line, the separate divisions are considered profit centers.

Each divisions performance can be evaluated in terms of profits. Since divisional managers take
all decisions relating to technology, product mixes strategies, and personnel, they may influence
both revenues and expenses. The expenditure of a departments sub-units are added and then
deducted from the revenues derived from that divisions all products and services.

The net result is the measure of that divisions profitability. In non-divisionalized organizations,
or within a division, individual departments may also be made into profit centers by crediting
them for revenue and charging them for expenses. A manufacturing department, for example,
would normally be considered as a cost center.

Allowing the manufacturing department to sell its products at an agreed rate [called transfer
price] to the sale department would be a method of making it a profit center. The difference
between the transfer price and the manufacturing costs per unit would represent the
manufacturing departments profits.

(d) Investment Center:

An investment center is a responsibility center whose manager is responsible for earning a rate of
return on the assets used in his responsibility center. In an investment center, the control system
again measures the monetary value of inputs and outputs, but it also assesses how those outputs
compare with the assets employed in producing them.

For example, divisions in an automobile manufacturing company, individual departments in a

departmental store and individual branches of a multiple shop are investment centers. It is
important to realize that any profit center can also be considered an investment center, because
its activities require some form of capital investment. In other words, an investment center can
be considered as a special type of profit center, in which focus is also on assets employed.

However, a centers capital investment insignificant [as a consultancy firm] or its managers have
no control over capital investment; it may be more appropriately treated as a profit center. The
distinguishing feature of an investment center that it is evaluated on the basis of the rate of return
earned on the assets invested in that center, while a profit center is evaluated on the basis of
excess revenue over expenses for the period.

Hence, it is better to designate a segment as an investment center rather than a profit center in
order to enhance the utility of responsibility accounting. A segment may earn greater profits than
others not because of better performance but by using more assets to earn such profits.

What is Controllable Cost?

Controllable cost is an expense that can be increased or decreased based on a particular business
decision. In other words, the management has the power to influence such decisions. These costs
can be altered in the short term. In general, costs relating to a particular business decision are
controllable; if the company decides to refrain from making the decision, the costs will not have
to be incurred. The ability to control costs mainly depends on the nature of the cost and decision-
making authority of the managers.

What is Uncontrollable Cost?

Uncontrollable cost is a cost that cannot be increased or decreased based on a business decision.
In other words, it is an expense that a manager has no power to influence. Many uncontrollable
costs can only be altered in the long term. If a cost has to be incurred irrespective of making a
specific business decision, such costs are often classified as uncontrollable costs. Similar to
controllable cost, uncontrollable costs can also arise due to the nature of the cost and decision-
making authority of the managers.
Controllable vs Uncontrollable Cost
Controllable cost is an expense that can be increased Uncontrollable cost is a cost that cannot be
or decreased based on a particular business decision. increased or decreased based on a business
Time Period
Controllable costs can be altered in the short term.Uncontrollable costs can be altered in the long
Variable cost, incremental cost and stepped fixed Fixed Cost is an uncontrollable cost in nature.
cost are types of controllable costs.
Decision-making Authority
Managers with higher decision-making authority can Many costs are uncontrollable when decision-
control costs. making authority is low.

Transfer Pricing:
Purposes of Transfer Pricing There are two main reasons for instituting a transfer pricing

Generate separate profit figures for each division and thereby evaluate the performance of
each division separately.
Help coordinate production, sales and pricing decisions of the different divisions (via an
appropriate choice of transfer prices). Transfer prices make managers aware of the value
that goods and services have for other segments of the firm.
Transfer pricing allows the company to generate profit (or cost) figures for each division
The transfer price will affect not only the reported profit of each center, but will also
affect the allocation of an organizations resources.

Alternative Methods of Transfer Pricing

A transfer pricing policy defines rules for calculating the transfer price. In addition, a transfer
price policy has to specify sourcing rules (i.e., either mandate internal transactions or allow
divisions discretion in choosing whether to buy/sell externally). The most common transfer
pricing methods are described below.

Market-based Transfer Pricing:

When the outside market for the good is well-defined, competitive, and stable, firms often use
the market price as an upper bound for the transfer price.

Concerns with market-based Transfer Pricing: When the outside market is neither competitive
nor stable, internal decision making may be distorted by reliance on market-based transfer prices
if competitors are selling at distress prices or are engaged in any of a variety of special pricing
strategies (e.g., price discrimination, product tie-ins, or entry deterrence). Also, reliance on
market prices makes it difficult to protect infant segments.
Negotiated Transfer Pricing

Here, the firm does not specify rules for the determination of transfer prices. Divisional
managers are encouraged to negotiate a mutually agreeable transfer price. Negotiated transfer
pricing is typically combined with free sourcing. In some companies, though, headquarters
reserves the right to mediate the negotiation process and impose an arbitrated solution.

Cost-based Transfer Pricing

In the absence of an established market price many companies base the transfer price on the
production cost of the supplying division. The most common methods are:

Full Cost
Variable Cost plus Lump Sum charge
Variable Cost plus Opportunity cost
Dual Transfer Prices

Full Cost A popular transfer price because of its clarity and convenience and because it is often
viewed as a satisfactory approximation of outside market prices.

(i) Full actual costs can include inefficiencies; thus its usage for transfer pricing often fails to
provide an incentive to control such inefficiencies.

(ii) Use of full standard costs may minimize the inefficiencies mentioned above.

Cost-plus When transfers are made at full cost, the buying division takes all the gains from trade
while the supplying division receives none. To overcome this problem the supplying division is
frequently allowed to add a mark-up in order to make a reasonable profit. The transfer price
may then be viewed as an approximate market price.

Variable Cost plus a Lump Sum Charge In order to motivate the buying division to make
appropriate purchasing decisions, the transfer price could be set equal to (standard) variable cost
plus a lump-sum periodical charge covering the supplying divisions related fixed costs.

Variable Cost plus Opportunity Cost Also know as the Minimum Transfer Price:

Minimum Transfer Price = Incremental Cost + Opportunity Cost.

For internal decision making purposes, a transfer price should be at least as large as the sum of:

- Cash outflows that are directly associated with the production of the transferred goods;
- The contribution margin foregone by the firm as a whole if the goods are transferred
Sub-optimal decisions can result from the natural inclination of the manager of an autonomous
buying division to view a mix of variable and fixed costs of a selling division plus, possibly, a
mark-up as variable costs of his buying division.

Dual Transfer Prices To avoid some of the problems associated with the above schemes, some
companies adopt a dual transfer pricing system. For example:
1. Charge the buyer for the variable cost. The objective is to motivate the manager of the
buying division to make optimal (short-term) decisions.
2. Credit the seller at a price that allows for a normal profit margin. This facilitates a fair
evaluation of the selling divisions performance.

Reporting to management Meaning:

The reporting to management is a process of providing information to various levels of
management so as to enable in judging the effectiveness of their responsibility centres and
become a base for taking corrective measures, if necessary.

Objectives or Purpose of Reporting to management

Means of Communication: A report is used as a means of upward communication. A report is
prepared and submitted to someone who needs that information for carrying out functions of

Satisfy Interested Parties: The interested parties of management report are top management
executives, government agencies, shareholders, creditors, customers and general public.
Different types of management reports are prepared to satisfy above mentioned interested

Serve as a Record: Reports provide valuable and important records for reference in the future.
As the facts and investigations are recorded with utmost care, they become a rich source of
information for the future.

Legal Requirements: Some reports are prepared to satisfy the legal requirements. The annual
reports of company accounts is prepared to furnished the same to the shareholders of the
company under Companies Act 1946. Likewise, audit report of the company accounts is
submitted before the income tax authorities under Income Tax Act 1961.

Develop Public Relations: Reports of general progress of business and utilization of national
resources are prepared and presented before the public. It is useful for increasing the goodwill of
the company and developing public relations.

Basis to Measure Performance: The performance of each employee is prepared in a report

form. In some cases, group or department performance is prepared in a report form. The
individual performance report is used for promotion and incentives. The group performance
report is used for giving bonus.

Control: Reports are the basis of control process. On the basis of reports, actions are initiated
and instructions are given to improve the performance.
Types of Reports:
External Reports:

These reports are meant for external parties such as government, shareholders, bankers, financial
institutions, etc., for example, published financial statements of companies. Copies of such
reports are also to be filed with the Registrar of Joint Stock companies and with the stock
exchange. In the interest of general understanding, these reports are expected to conform to
certain minimum standards of disclosure and disclose certain basic details under the Companies
Act, 1956.

Internal Reports:

These reports are meant for internal uses of different levels of management such as top level,
middle level, and junior level of managements. Hence, the approach to the reporting problem
would vary according to the reporting level. These reports do not have to conform to any
statutory standards. While the reports meant for top management have to be comprehensive and
concise, the reports to operating supervisors should be specific and detailed.

Routine Reports:

These reports cover routine matters and are submitted at periodical intervals on regular basis.
Example, variance analysis, financial statements, budgetary control statements are routine
reports. They are submitted to different levels of management as per a fixed time schedule.
Routine reports are usually printed or cyclostyled forms with blank spaces to be filled in. most of
the internal reports are of the nature of the routine reports.

Special Reports:

Reports, which are submitted on particular occasions on specific requests or instructions, are
special reports. When problems arise in a business, they are to be investigative. The results of
investigations and the recommendations are submitted by way of special reports. The form and
contents of special reports will vary according to the nature of problem investigated. Usually a
special report contains the terms of reference i.e., the problem to be studied, investigations made,
findings and observations and finally conclusions and recommendations.

Examples of some of the special reports are:

1. Reports of information about competitive products,

2. Reports by the Cost Accountants on the implication of price changes on the cost of products,

3. Reports regarding choice of products or selection of a production method, etc.

Operating Reports:

These reports may be classified into Control report and Information Report.
Control Report:

It is an important ingredient of control process and helps in controlling different activities of an

enterprise. It provides information properly collected and analyzed to different levels of
management. The framework of this report is determined by the needs of the undertaking.

It is based on the companys developed budgets and standards. It is related to responsibility

centers and it observes decision needs. This report may be prepared on weekly, fortnightly,
monthly, or yearly basis depending upon the urgency of the matter reported. Most of the internal
reports are examples of control reports. They are also sort of routine reports.

Information Report:

These reports provide information, which are very much useful for future planning and policy
formulation. They may take the form of trend reports or analytical reports. Trend reports provide
information in a comparative form over a period of time. On the other hand, analytical reports
provide information n a classified manner.

Sometimes these reports provide information in a summarized form the results of operation of a
specific venture or of the organization as a whole for a specific period. In such cases they may be
called as venture measurement reports.

Financial Reports:

These reports contain information about the financial position of the business. They may be
classified into Static Reports and Dynamic Reports. Static report reveals the financial position on
a particular date e.g., balance sheet of a company. On the other hand, the dynamic report reveals
the movement of funds during a specified period, e.g., funds flow statement, cash flow statement.

Need of Reporting & presentation at Different Management level :

The presenting report should satisfy the needs of various levels of management. The levels of
management can be divided into three categories. They are,

1. Top level management.

2. Middle level management.
3. Lower level management or First line management.

Generally, the lower level of management requires more detailed report. But the top level
management requires very short report. The lower level management consisting of
foreman, supervisor and the like. The top level management consisting of Managing Director,
Board of Directors, Company Secretary and General Manager.
The frequency of report to lower level management should be kept in minimum. But, in the case
of top level management maximum numbers of reports required for taking policy decision and
improve the operational efficiency of the concern.
Reporting to top level management
Several reports are submitted before the top level management to achieve the following

Framing basic objectives of the organisation.

Prepare the planning activities to achieve objectives of organisation.
Proper delegation of authority and responsibility to various levels of managerial executives
for effective and efficient operation.
Promoting appropriate development schemes.
Framing various policy decision.
Taking of capital expenditure decision.
Deciding about merger and acquisition of business.
Decide the time of implementing expansion or modernization programme.

Reports to be submitted to top level management

Managing Director
1. Periodic report about Profit and Loss Account and Balance Sheet.
2. Fund flows statement and cash flow statement.
3. Report on production trend and utilization of capacity.
4. Reports about cost of production.
5. Periodic reports on sales, selling and distribution expenses, credit collection.
6. A statement on research and development expenditure.
Board of Directors
1. Quarterly Balance Sheet and Profit and Loss Account.
2. Quarterly Fund Flows Statement and Cash Flows Statement.
3. Quarterly Cost of Production Statement.
4. Quarterly Labour and Machine Utilization Statement.
Production Manager
1. Monthly cost of production statement.
2. Monthly department wise machine utilization statement.
3. Monthly department wise labour utilization statement.
4. Monthly department wise material scrap statement.
5. Monthly department wise overheads cost statement.
6. Monthly production statement showing budgeted quantity, actual quantity produced and
other relevant matters.
Sales Director
1. Monthly report of order received, or orders executed, orders kept pending product wise
and division wise.
2. Monthly report of finished goods stock position product wise.
3. Monthly report of selling and distribution cost division wise.
4. Monthly report of credit collection,arrears and bad debts division wise.
Finance Director
1. Monthly Fund Flows Statement.
2. Monthly Cash Flows Statement.
3. Monthly abstract of receipts and payments.
Reporting to Middle level management
Generally, plans are prepared to achieve the objectives of the organisation by the top level
management. But, the plans are actually executed by the middle level management. In this
context, the following reports are submitted before the middle level management.

Reports to be submitted to middle level management

Production Manager
1. Report on actual production figures along with budgeted production figures for a specific
period. These reports are generally daily, weekly or fortnightly-product wise.
2. The figures about the availability and utilization of workers. Figures about normal and
abnormal idle time are also reported.
3. Capacity utilization report.
4. Material usage report-product wise.
5. Machine and Labour utilization report-product wise.
6. Absenteeism and labour turnover reports.
7. Scrap report product wise.
8. Machine hours lost report.
9. Stock position report-product wise.
10. Analysis of budgeted cost of production and actual cost of product etc in product wise.
Sales Manager
1. Reports on budgeted and actual sales. These reports are submitted area wise and product
wise to the sales manager.
2. Weekly reports on orders booked, orders executed and orders pending product wise.
3. Reports on credit collection and bad debts.
4. Reports on stock position-product wise.
5. Analysis of selling and distribution expenses product as well as area wise.
6. Market survey reports.
7. Reports on customers complaints.
8. Reports on effectiveness of sales promotion campaigns etc.
Purchase Manager
1. Raw materials purchased, actual materials received and orders pending materials wise.
2. Use of raw materials for production-materials wise.
3. Stock of raw materials-materials wise along with the details of minimum level and
maximum level.
4. Analysis of purchase of expenses.
5. Budgeted cost of purchases and actual cost of purchase.
Finance Manager
1. Report on cash and bank balances.
2. Periodic fund flow and cash flow statement.
3. Debtors collection period reports.
4. Report on average payment period.
5. Working capital analysis report.
6. Report on budgeted profit and actual profit.
7. Statement of changes in financial position.
8. Capital expenditure report.
Reporting to lower level management
Personnel in lower level management
The lower level management includes foreman, superintendents supervisors, and the like. They
are very much interested to know the level of work in progress of various jobs which are
performing under their supervision. Hence, the following list of reports submitted before the
lower level management.

Records to be submitted to lower level management

Shop Foreman
1. Daily report of idle time and machine utilization.
2. Daily scrap report.
3. Daily production report budgeted and actual-product wise.
Sales Area Supervisors
1. Weekly sales report-salesman wise and product wise.
2. Weekly report of orders booked, executed and outstanding.
3. Weekly report of credit collection, outstanding and bad debts..
Sales Supervisor
1. Sales Force Progress of work.
2. Sales Promotion Work.
3. Exports.
4. Publicity and advertisement.
5. Cost of sales.
Production Supervisor
1. Details of Raw Materials-Stock position-material wise.
2. Finished goods stock levels-product wise.
3. Work in progress-product wise.
4. Capital expenditure.
5. Progress of capital works.
Personnel Supervisor
1. Direct labour employment estimates-approved and proposed.
2. Other labour employment-approved and proposed.
3. Approximate cost of present and proposed staff.
Finance Supervisor
1. Accounts receivable position and estimates.
2. Accounts payable position and estimates.