question archive Tim Emmett is the manager of the machine shop at Fairview Manufacturing Company and John Mayfield is the manager of the equipment maintenance department
Tim Emmett is the manager of the machine shop at Fairview Manufacturing Company and John Mayfield is the manager of the equipment maintenance department
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Tim Emmett is the manager of the machine shop at Fairview Manufacturing Company and John Mayfield is the manager of the equipment maintenance department. Rob Fairview, son of the company’s founder, is the plant manager. Tim and John were chatting one afternoon walking back from a meeting.
Tim: I just received the worst performance evaluation of my career this morning. Bob Fairview had always said my work was high-quality. But, it seems when Rob became the plant manager last year and began asking for reports comparing actual to budgeted, every month I either get a pat on the back or I get in deep trouble. I don’t know if I can take this until I retire. I really don’t understand. My department has worked so hard to meet the budget and the minute we do they tighten it on us. We can’t work any faster and still maintain quality. I think my guys 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, John, 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.
John: I’m sorry about that Tim, but you know my department has had trouble making budget too. We were running well behind at the time of that problem, and if we’d spent a day on that old machine, we would never have made 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.
Tim: Well John, at least 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 wasted last month when you were working in Ben’s production department?
John: 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.
Tim: Well, I’m glad you have a way of getting out of the pressure. The accountants seem 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 and they’re trying to save pennies.
Required: Identify and describe four problems with the company’s budgetary control system that appear to reduce its effectiveness and may cause it to interfere with good performance. For each of the four problems you identify, suggest a way in which the budgetary control system could be improved. The improvements can be at any level from overall company goals to specific best practices for budget control systems, but they must address the problems you identified.
Number your four problems/recommendations descriptions. Descriptions should be a paragraph for each problem and each recommendation describing the problem and how the recommendation will address the problem.
