Lightwave Radio Ltd produces a range of products at its assembly plant. Due to recent rapid expansion the company’s system of management control is now inadequate. The board has established a working party drawn from all disciplines of management to develop the structure for a new computer-based management control and reporting system.

As chief accountant, you represent the finance department on the working party and believe that the management reporting system should be based on the division of the production process into a series of cost centres.

Required

(a) Explain the essential features of a cost centre.

(b) Identify the main features you would expect to find in a cost control report prepared for use at individual cost centre level.

(c) List three objections or questions which you might anticipate receiving from other members of the working party, and explain how you would answer each.