Solved: Duit plc has recently acquired Ucando Ltd which is

a
Duit plc has recently acquired Ucando Ltd which is a

Duit plc has recently acquired Ucando Ltd which is a regional builders' merchants/DIY company
with three outlets all within a radius of 40 miles. Duit plc is building up its national coverage of
outlets. Duit plc has set up regional companies each with its own board of directors responsible
to the main board situated in London.

It is expected that eventually each regional company will have between 10 and 20 outlets under
its control. A regional company will take over control of the three Ucando Ltd outlets. Each
outlet will have its own manager, and new ones have just been appointed to the three Ucando
Ltd outlets.

The outlets' managers will be allowed to hire and fire whatever staff they need and the
introduction of a head count budget is being considered by head office. Each outlet manager is
responsible for his own sales policy, pricing, store layout, advertising, the general running of the
outlet and the purchasing of goods for resale, subject to the recommendations below. Duit plc's
policy is that all outlet managers have to apply to the regional board for all items of capital
expenditure greater than £500, while the regional board can sanction up to £100 000 per capital
expenditure project.

The outlets will vary in size of operations, and this will determine the number of trade sales
representatives employed per outlet. There will be a minimum of one trade sales representative
per outlet under the direction of the outlet manager. Each manager and representative will be
entitled to a company car.

Outlet sales are made to both retail and trade on either cash or credit terms. Debtor and cash
control is the responsibility of regional office. Cash received is banked locally, and immediately
credited to the head office account. Credit sales invoices are raised by the outlet with a copy
sent to regional office. Within each outlet it is possible to identify the sales origin, e.g. timber
yard, saw mill, building supplies, kitchen furniture, etc. Timber for resale is supplied to an outlet
on request from stocks held at regional office or direct from the ports where Duit (Timber
Importers) Ltd has further stocks. Duit Kitchens Ltd provides kitchen furniture that the outlets
sell. Duit plc also has a small factory making windows, doors and frames which are sold through
the outlets. When purchasing other products for resale, the outlet is requested to use suppliers
with which head office has negotiated discount buying arrangements. All invoices for outlet
purchases and overheads are passed by the respective outlet manager before being paid by
regional office. In existing Duit outlets a perpetual inventory system is used, with a complete
physical check once a year.

Information concerning last year's actual results for one of Ucando Ltd's outlets situated at
Birport is given below:

Reach out to freelance2040@yahoo.com for enquiry.

Position at 31 March

(£)

Debtors 100 900

Stock 512 000

1 Sales can be identified by till code: cash/credit, trade/ retail, timber, kitchen furniture, frames,
heavy building supplies, light building supplies, sawmill etc.

2 Workforce distributed as follows: timber yard (3), sawmill (1), sales (7), general duties (1),
administration (3).

3 Paid to sales representatives (2), assistant manager, manager.

4 Equipment used in sales area, sawmill, yard.

(a) Describe a cost centre, a profit centre and an investment centre and discuss the problems of
and benefits from using them for management accounting purposes.

(b) Suggest key performance indicators which can be used either individually or jointly by each
member of the management team for the regional outlet network, i.e. those in the regional
office, the outlets and their departments, in a responsibility reporting system for their evaluation
purposes.

(c) Justify the key performance indicators that you have suggested in (b) incorporating, where
appropriate, reference to whether the individuals or entities are being treated as cost, profit or
investment centres.

(d) Design a pro forma monthly report without figures which can be used by both the outlet
manager for his management and control needs and by the regional board to evaluate the
outlet.

The report can include two or more sections if you wish. Provide a brief explanation for the
format chosen.

The manufacturing companies and the importing company report direct to the main board.

Duit plc has recently acquired Ucando Ltd which is a

ANSWER
Reach out to freelance2040@yahoo.com for enquiry.
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Reach out to freelance2040@yahoo.com for enquiry.

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