Responsibility Reporting for Cost Centres:
A specimen of responsibility performance reporting for cost centres is given in Exhibit 11.4 which has been designed to provide relevant cost information to three levels of responsibility centres in a manufacturing enterprise — Foreman, Production Manager, General Manager.
From the Exhibit 11.4 it can be found that each responsibility report contains items and information which are required by the concerned responsibility centre manager and which are within his responsibility area. For example, in the foreman’s report, relevant production cost information is given.
In the responsibility report prepared for the production manager, information on different sections of his department is included in aggregated manner and for the general manager, the responsibility report contains information for different departments.
It can be further noticed that responsibility reporting goes on aggregating information as the reports are prepared for higher level managers in the organisational hierarchy. That is, the amount of detail decreases as reports reach higher and higher levels of management.
Managers cannot make effective use of information that is too detailed and voluminous. Departmental managers do not routinely receive reports detailing all of the costs of the work centres. Managers who want such detailed information can get it and might well seek it if they were concerned about some particular elements of cost.
Responsibility Report for Profit Centres:
Responsibility accounting reports for profit centres are normally in the form of income statements. The principle of controllability also applies to responsibility reporting for profit centres. The Exhibit 11.5 gives a sample of responsibility report for profit centres organised on the basis of product lines and geographical areas.
Managers at the lowest level of profit centre are responsible for product lines. They are subordinate to the managers of the geographical areas, who are, in turn, responsible to the Managing Director of the company. Profit centre reporting can be prepared in a different manner to provide more detail on individual components of the appliance segment in the particular region.
Exhibit 11.6 shows an alternative responsibility reporting format giving information on different categories of appliances. For simplicity, budgeted figures are omitted. The critical point in responsibility reporting is conveying the best information: the selection of the elements to include and the format are secondary.