Special Alloys Corporation manufactures a variety of specialized metal products for industrial use. Most of the revenues


Special Alloys Corporation manufactures a variety of specialized metal products for industrial use. Most of the revenues are generated by large contracts with companies that have government defense contracts. The company also develops and markets parts to the major automobile companies. It employs many metallurgists and skilled technicians because most of its products are made from highly sophisticated alloys.

The company recently signed two large contracts; as a result, the workload of Wayne Washburn, the general manager, has become overwhelming. To relieve some of this overload, Mark Johnson was transferred from the Research Planning Department to the general manager’s office. Johnson, who has been senior metallurgist and supervisor in the Research Planning Department, was given the title assistant to the general manager.

Washburn assigned several responsibilities to Johnson in their first meeting. Johnson will oversee the testing of new alloys in the product planning department and be given the authority to make decisions as to the use of these alloys in product development; he will also be responsible for maintaining the production schedules for one of the new contracts. In addition to these duties, he will be required to meet with the supervisors of the production departments regularly to consult with them about production problems they may be experiencing. Washburn expects to be able to manage the company much more efficiently with Johnson’s help.


1. Positions within organizations are often described as having (a) line authority or (b) staff authority. Describe what is meant by these two terms.

2. Of the responsibilities assigned to Mark Johnson as assistant to the general manager, which tasks have line authority and which have staff authority?

3. Identify and discuss the conflicts Mark Johnson may experience in the production departments as a result of his new responsibilities.

A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Managerial Accounting

ISBN: 978-0697789938

13th Edition

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

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