The subordinates were found to be pressurized to maintain and abide by the predetermined budget which was measured to be a grave issue as the stress adversely influenced the performance of the employees. The other problem was the absence of a healthy or good relation between the management and the workers after Robert Ferguson Jr. was appointed as the plant manager. He was learnt to be completely concerned towards cost reduction and attainment of the budget instead of admiring the efforts exerted by the workers and the problems witnessed by them which resulted in huge employee turnover. Furthermore, the accounting staffs were only concerned regarding budget maintenance instead of ensuring the quality of work. Installation of new machines and the time involved for setting up those machines were found to greatly hamper the working hours of the employees. The subordinate managers seemed to remain absolutely unaware of the reports of their respective performances and budgets. The foremost problem identified with regard to the BCS was the company’s adoption of a rigid approach to attain its budget requirements. The problems encountered in relation to the BCS as implemented in Ferguson & Son Manufacturing Company were believed to be trimming down the effectiveness of the concerned system as it resulted in decreasing the degree of motivation of the employees owing to unawareness of the system in relation to budgeting. These factors prevented the company from being able to attain its goals as well as objectives. Dearth of flexibility in terms of adapting to any kind of alterations made in the company was also considered to be another problem. All these resulted to ineffective management of the budgetary system. Revising Ferguson & Son Manufacturing Company’s budgetary control system to improve its effectiveness A proper medium of communication of the goals as well as objectives within the company needs to be ensured to improve the effective of BCS in Ferguson & Son Manufacturing Company. The company should have an effectual coordination between its various divisions. While preparing and setting the budget, company should involve every individual level of the management and there along with sharing a mutual exchange of information. The company also needs to focus on increasingly motivating the employees in order to boost the overall productivity. Performances of the employees at all levels should be monitored and reported in a systematic manner with regard to their current activities. An appropriate investigation of operations as well as monitoring expenditure may help to trim down costs and lead to greater efficiency of the BCS (Rajasekaran & Lalitha, 2010). A regular screening of the results in a methodical manner should be conducted to compare it with the planned budget. Best possible utilization of resources to earn profits should be made certain of by the company. The structure of the company should evidently demonstrate the line of power and its assignment of authority along with responsibility to provide an effective budgetary control. The goal of the company requires being quite apparent. An appropriate accounting system should be adopted to arrive or produce meaningful results. The budget obtained for the company need to have a specific time within which the aims as well as intentions should be realized. The company shou
Manufacturing Budget Analysis Problems in budgetary control system of Ferguson & Son Manufacturing Company and its Impacts A Budgetary Control System (BCS) is a technique of managing as well as supervising income along with expenditure for a sustainable flow of cash for various companies…
The overall case study describes the conversation that took place between Tom Emory, the manager of machine shop and Jim Morris, the manager of the division of equipment maintenance of Ferguson & Son Manufacturing Company. Initially, it was observed that the degree of efficiency was rapidly decreasing.
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