Dairies Ltd operates a milk processing and delivery business. The retail distribution of milk is controlled by a regional head office which has overall responsibility for five geographical distribution areas. Each area is run by an area manager who has responsibility for ten depots. At each depot there is a depot manager in charge of 20 drivers and their milk floats. Milk is bottled at a central processing plant and sent to depots by lorry.

All information regarding the operation of each depot and each area office is sent to the divisional head office accounting department. This department produces weekly reports to be sent to each depot manager, each area manager and the manager of the distribution division.

A pyramidal system of reporting is in operation whereby each manager receives an appropriate weekly report containing the financial information on the operations for which he is responsible.

Required

1. Explain what is meant by responsibility accounting.

2. List, giving reasons, the information which should be contained in the weekly reports to each of the three levels of manager specified.