1, INRODUCTION; MEANING OF CONCEPTS 1.1.

Management Accounting Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. In contrast to financial accountancy information, management accounting information is: designed and intended for use by managers within the organization, instead of being intended for use by shareholders, creditors, and public regulators; usually confidential and used by management, instead of publicly reported; forward-looking, instead of historical; computed by reference to the needs of managers, often using management information systems, instead of by reference to general financial accounting standards. In short, it is a process of preparing management accounts that provide accurate and timely key financial and statistical information required by managers to make day-to-day and short-term decisions 1.2 Centralized Company A centralized company refers to management practice in which all or most decision makers (who have the authority, control, and responsibility for the entire organization) are located in one central office (the headquarters). It is a company in which the activities of an organization, particularly those regarding decision-making, become concentrated within a particular location and/or group. 1.3 A Profit Center .According to Drucker, Peter F. (2002) through Wikipedia, the free encyclopedia, a profit center is a part of a corporation that directly adds to its profit. A profit center is a section of a company treated as a separate business. Thus profits or losses for a profit center are calculated separately. A profit center manager is held accountable for both revenues, and costs (expenses), and therefore, profits. What this means in terms of managerial responsibilities is that the manager has to drive the sales revenue generating activities which leads to cash inflows and at the same time control the cost (cash outflows) causing activities. This makes the profit center management more challenging than cost centre management. Profit center management is equivalent to running an independent business because a profit center business unit or department is treated as a distinct entity enabling revenues and expenses to be determined and its profitability to be measured. Business organizations may be organized in terms of profit centers where the profit center's revenues and expenses are held separate from the main company's in order to determine their profitability. Usually different profit centers are separated for accounting purposes so that the management can follow how much profit each center makes and compare their relative efficiency and profit. Examples of typical profit centers are a store, a sales organization and a consulting organization whose profitability can be measured.

2. TYPES OF DECISION AREAS FOR COMPANYS REORGANIZATION 2.1. Decision Area Transferred to the New Divisional Managing Directors The types of decision area that should be transferred to the new divisional managing directors for the achievement of the reorganizations objectives are: Decisions on the budgeting and finance by creating the divisions budget, implementing controls over spending and procurement to ensure adherence to the company budget. Decisions on providing leadership and assistance to their team members Decisions on staffing and training by assisting recruiting, selecting, interviewing and hiring of new staffs for their new divisions Decisions on conflict resolution by fostering positive relationships with staffs; handling all intercompany disputes and conflicts Decisions on establishment of goals by developing divisional policies for achieving all company goals related to the responsibilities of the division managers 2.2 Decision Area Retained at Company Head Office The types of decision area that might reasonably be retained at company head office Decision on companys master budget of a given period Decision on overall responsibility for managing both the revenue and cost elements of companys income statement (profit/loss responsibility) Decision on companys marketing and sales by oversee most or all of the firms marketing and sales function as well as the day-to-day operations of the business Project management administration, planning, estimating, purchasing, cost accounting and information handling Leading or coordinating the strategic or corporate planning functions of the company Aligning the company, internally and externally with the strategic vision Facilitate business outside of the company Guiding employees and other business managers towards a central; objective Decisions about what technologies, markets and products to go into and what businesses to start or to abandon Decisions on corporate finance and research Decisions on corporate personnel policy and on key appointment

2.3 The Possible Management Accounting Problems on Profit Centres The management accounting problems that might be expected to arise in introducing profit centers are: Not preparing timely information by accounting system of a given profit centre Incorrect allocation of overheads can lead to under or overestimation of profitability Increases administration and paperwork There can be loss of overall central control of the company Profit centers could be working towards different or non-company agendas Increased opportunity for empire building by management References Drucker, Peter F. (2002). Managing in the Next Society; St. Martin's Griffin; New York, New York 10010 http://us.macmillan.com/managinginthenextsociety. Retrieved from "http://en.wikipedia.org/wiki/Profit_center" ABSTRACT