Page 585 - Sensors and Control Systems in Manufacturing

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employee safety performance, and other information of interest to
workers can be shown in plant areas. These displays when projected
with the name and picture of an employee help keep the employees
informed and interested in their job performance.
All but the smallest of manufacturing businesses are usually
organized so that different managerial duties are assigned to differ-
ent persons. Along with each manager’s authority goes a responsibility
for managing the segment of business efficiently. Figure 11.3 shows a
simple organization chart for a typical manufacturing plant.
In responsibility reporting, information is reported on the basis of
areas and responsibility. For example, reports containing information
useful to foremen for performing their jobs will be directed to depart-
mental foremen.
This means that the responsibility accounting and reporting sys-
tem will be only as detailed as the company’s organization plan.
In a plant with the organization shown in Fig. 11.3, reports could be
prepared for the foremen, the supervisors, the purchasing agent, the
production manager, the sales manager, the salespeople, and the
president. A company that has other organization units must work
these into the plan if those units are to be served by responsibility-
oriented reports.
A responsibility-oriented accounting system should generate
reports that provide information on which each manager can base
decisions. The system should also provide reports showing the results
of these decisions.

11.3.3 Responsibility Centers
The responsibility centers may be cost centers, revenue (sales) cen-
ters, or profit centers. In Fig.11.3, each producing department and
each of the two service departments (purchasing and accounting) can
be considered a cost center if the costs of operations are analyzed
along those lines. Each product can be considered a profit center, with
the responsibility held jointly by the sales manager (of revenues) and
the product supervisors (for product costs). The sales office can be
considered a revenue center that produces the gross sales revenues of
the company.

11.3.4 Controllable and Uncontrollable Costs
Costs and revenues are reported to managers according to their con-
trollable and uncontrollable characteristics. A cost item is controllable
by a manager if action directly affects the amount of cost incurred.
Assume, for example, that the product managers have sole
authority to purchase equipment, thus incurring depreciation costs.
The depreciation cost is then controllable at the manager’s level but
uncontrollable at the department foreman level. Consequently, the
department foremen cannot be held responsible for depreciation