Tom Emory and Jim Morris strolled back
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Read the attached case - Evaluating a company's budget procedures and answer the following 2 questions.
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
2. Explain how Ferguson & Son manufacturing companies budgetary control system could be revised to improve its effectiveness
Tom Emory and Jim Morris strolled back to their plant from the administrative offices of
Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the
companies’ factory; Jim is manager of the equipment maintenance department.
The men had just attended the monthly performance evaluation meeting for
plant department heads. These meetings ha been held on the third Tuesday of each month
since Robert Ferguson Jr., the presidents son, had become plant manager a year earlier.
As they were walking, Tom Emory spoke: “Boy, I hate those meetings! I never
know whether my departments accounting reports will show good or bad performance.
I’m beginning to expect the worst. If the accountant says I saved the company a dollar.
I’m called “Sir” but if I spend even a little too much¬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 long
career with Ferguson & Son. He was the most respected of the experienced machinists in
the company. He had been with Ferguson & son for many years and was promoted to
supervisor of the machine shop when the company expanded and moved to its present
location. The president (Robert Ferguson, Sr) had often stated that the company’s success
was due to the high¬quality work of machinists like Tom. As supervisor, tom stressed the