You are the management accountant at the head office of a company which owns retail shoe shops throughout the country. The shops are grouped into areas, each having an area manager. Goods for sale are bought through a central purchasing scheme administered by head office. Shop managers have discretion to vary sales prices subject to the approval of the area manager. It is the responsibility of shop managers to record on a wastage sheet any shoes which are discarded because of damage in the shop. Shop managers have total control over the number of staff they employ and the mix of permanent and casual staff, subject to interview in the presence of the area manager. Shop managers also arrange for cleaning of the premises and are responsible for heat and light and other overhead costs.

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