Question

General Instructions:

For this case, you will be responsible for preparing a memo in a Word document to address the situation. Memo formats are available in Word under File, New, Search on Professional Memos or Memos for options. You can select a format or create your own memo in Word. If you create your own, be sure to follow general memo format rules such as Link  (Links to an external site.) (Links to an external site.)Furthermore, the link contains helpful information in the format of the body of a memo ie. single spacing, flush to the left margin no indent, etc.

Detailed Instructions:
In a business setting, we are often asked to write a memo to communicate with internal and external professionals. This assignment further advances your communications within an organization through the use of a memo.

Background:

As the senior accountant at Technology on Demand (TOD), which manufactures mobile technology such as flip phones, smartphones, notebooks, and smart watches, your role with the budget process continues.

You are very pleased with how well the budget workshop held on September 21^st went. Department managers came, were engaged, and asked a number of important questions.

Michelle Dodd advised department managers that you would follow up in a memo to address a few of the department managers’ questions.

Department managers asked:

1. What is decentralization?
2. What does the current organizational chart of the organization look like based on the entire organization? TOD falls under the Technology division of the corporate headquarters, Johnson Holding Company. The only other division is Office Equipment.
3. What responsibility center will the department managers be evaluated on? Provide details of this type of cost center.
4. What are responsibility reports and the controllability concept?
5. What is managerial performance measurement?

In consideration of the background, prepare a memo in a Word document to submit to the department managers with a cc to the controller.

• An introduction paragraph advising department managers that your memo is addressing questions stemming from the budget workshop held on September 21^st is needed.
• In responding to questions, you will want to begin your discussion by explaining decentralization.
• Department managers requested a copy of the current organizational chart. Please insert a diagram of the organizational chart. You can insert shapes in your memo, prepare in a Word table, or Excel with a copy and paste into your main Word document. A general flow description will work. Department managers represent the sales department, production department, research and development department, and the accounting department. The production department consists of the assembly department, inspection department, and finishing department.
• Then address the remaining questions outlined above.
• End your memo with a closing paragraph.

Answer 1

21st September		Memo

To Department Manger From Michelle Dodd CC Controller Re Budget Workshop

I would to like to begin with thanking everyone for their participation in the Budget Workshop held on 21^st September.

I would like to discuss the areas where further clarification was required.

Decentralization

Decentralization is systematic way of delegation of authority to all the employee throughout the organization. It is wider than delegation as the authorities are diffused to the lowest most level of management. It should be divided in such a way that the tasks are not repeated.

All the employees get a chance to decide and act independently which develops skills and capabilities which increases the efficiency of each employee.

Especially an organization like ours where several department is there decentralization allows us to interact with each other and speedy decision making processes.

Evaluation of Department Manager on the basis of responsibility center. It would help the Company as well Dept. Manager to evaluate the performance and the area of control.

The Dept. Managers will be evaluated on the basis of overall cost reduction in their respective department.

Implementation of Decentralization process.

Increase in the employees productive. Cost cannot be reduced by just employees it can be increased when the individual employees output increased.

There are two cost centers on basis of which they can be assessed one production cost center and second is services cost center.

All the departments will be assessed on the basis of production cost centers.

Responsibility Report

Responsibility report contains items and infor­mation which are required by the concerned responsibility of each Dept. Manager and which are within his responsibility area.

Every quarter detailed reports relating to the cost centers will be circulated. Dept. Managers who want such detailed information can get it and might well seek it if they were concerned about some particular elements of cost.

Controllability Concept

The concept of responsibility accounting is referred to as controllability. Dept. Manager will be held responsible for those aspects of performance that he or she can control. To apply the controllability concept produce responsibility reports where each layer of management is held responsible for all subordinate management.

Managerial Performance Measurement

Managerial performance measurement is the assessment of the performance carried out in each department, in their function at different levels of management- Director, Dept. Manager, Senior, Middle, Junior, Supervisory and first line.

Performance is measured by

1. Amount of Profit or Surplus.

2. The rate of Productivity.

3. Working Environment of Organization.

4. Quality of Techniques.

5. Response Rate of Managers to the Feedbacks.

6. Relationship with External Interested Parties with Management.

7. Labour-Management Relationship.

I hope all the concepts are covered broadly. I am thankful to the all the Dept. Manager for their participation in the workshop and for all the valuable comments and doubts.