Could someone answer for me this question. Thank you in advance.
donc Cases rative offices of Ferguson of ca chine shop in the company's factory Sum is wat buona www.mhhe.comoreene og for plant department ha bert Ferguson, Jr., the presiden the inte info sald ever know whether they car ginning to expect the Wor, I spend even a little too much CASE -29 Evaluating a company's Budget Procedures (LOI) Tom Emory and Jim Morris strolled back to their plant from the administrati Manufacturing Company. Tom is manager of the machine shop in the of the equipment maintenance department The man had just attended the monthly performance evaluation meeting These meetings had been held on the third Tuesday of each month since Robert son, had become plant manager a year earlier. As they were walking, Tom Emory spoke: "Boy, I hate those meetings department's accounting reports will show good or bad performance. I'm beginni the accountants say I saved the company a dollar, I'm called 'Sir,' but if I boy, do I get in trouble. I don't know if I can hold on until I retire." Tom had just been given the worst evaluation he had ever received in his in & Son. He was the most respected of the experienced machinists in the compa Ferguson & Son for many years and was promoted to supervisor of the machine sh expanded and moved to its present location. The president (Robert Ferguson, Sr) had company's success was due to the high-quality work of machinists like Tom. As su the importance of craftsmanship and told his workers that he wanted no sloppy work department. er with Ferguson company. He had been with ine shop when the company Sre) had often stated that the supervisor, Tom stressed ny work coming from his onthly performance com partmental budgets were ek cost reduction opportunities det slightly whenever a depart- anager's desire to reduce When Robert Ferguson, Jr, became the plant manager, he directed that monthly perfo parisons be made between actual and budgeted costs for each department. The departe intended to encourage the supervisors to reduce inefficiencies and to seek cost reduction The company controller was instructed to have his staff tighten" the budget slightly when ment attained its budget in a given month; this was done to reinforce the plant manager's desire costs. The young plant manager often stressed the importance of continued progress toward and budget: he also made it known that he kept a file of these performance reports for future reference succeeded his father. Tom Emory's conversation with Jim Morris continued as follows: Emory: I really don't understand. We've worked so hard to meet the budget, and the minute we do so they tighten it on us. We can't work any faster and still maintain quality. I think my men are ready to quit trying Besides, those reports don't tell the whole story. We always seem to be interrupting the big jobs for all those small rush orders. All that setup and machine adjustment time is killing us. And quite frankly, Jim, you were no help. When our hydraulic press broke down last month, your people were nowhere to be found. We had to take it apart ourselves and got stuck with all that idle time. Profit Planning I'm sorry about that, Tom, but you know my department has had trouble making budget, too. We were inning well behind at the time of that problem, and if we'd spent a day on that old machine, we would never have nade it up. Instead we made the scheduled inspections of the forklift trucks because we knew we could do those in less than the budgeted time. wer: Well, Jim, at Icast you have some options. I'm locked into what the scheduling department assigns to me and you know they're being harassed by sales for those special orders. Incidentally, why didn't your report show all the supplies you guys Wustel last month when you were working in Bill's department? Morris: We're not out of the woods on that deal yet. We charged the maximum we could to other work and haven't even reported some of it yet. Emory: Well, I'm glad you have a way of getting out of the pressure. The accountants scem to know everything that's happening in my department, sometimes even before I do, I thought all that budget and accounting stuff was supposed to help, but it just gets me into trouble It's all a big pain. I'm trying to put out quality work, they're trying to save pennies. Required: 1. Identify the problems that appear to exist in Ferguson & Son Manufacturing Company's budgetary control system and explain how the problems are likely to reduce the effectiveness of the system. Explain how Ferguson & Son Manufacturing Company's budgetary control system could be revised to improve its effectiveness. (CMA, adapted) ning 109. L010)
