Management Control Systems


Management Control Systems 301

Due: 12 noon on Wednesday, 2 April 2014

There are four questions will be discussed in this portfolio assignment. The first question is about the assigning the responsibility for the skilled employees’ wages in manufacturer. The second question will discuss about the two most successful companies in my opinions which are the Apple Inc. and Walmart. Question three is about the advantages and problems that would occur while implement the participatory budgeting system in the service firm. Lastly, I will identify the strategy that would employ by the company in the independent situations that was given in the questions.Introduction

Question One

The Service Department should not be charged for the excess wages which is $11 per hour ($26 – $15) of the skilled employees who are temporarily assigned to the Service Department. As the controller, there are few modifications should be made in the F.T. Electronics’ responsibility-accounting system.

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First, every Department has their own budget and $15 per hour is the average rate of the wages for the Service Department employees. In order to control Service Department’s budget and make sure the actual labour cost of the department does not over the budget with high percentages, Service Department should be charged only the normal wages which are $15 per hour for the those employees who are temporarily assigned to the department. Besides, the tasks that perform by the highly skilled employees is only the general service and assumed that it was same as other employees tasks in the Department, so, it would be fair that these highly skilled employees charges the same wages as others in the Service Department.

Second, the additional $11 per hour should be charged to a top management level account. This is because the decision to keep these highly skilled employees on the payroll was made by top management not by the Service Department. Hence, it would be reasonable that the excess wages of $11 per hour should not be charged to the Service Department.

(227 words)

Question Two

In my opinions, one of the most successful company or organization today is Apple Incorporated[1]. I believe that almost everyone nowadays know about this company and some are currently using and satisfied with the products and services that produce by them. According to the research, Apple is the world’s most valuable brands. (Forbes 2014) Apple Inc. is employ product differentiation strategy and core competencies for the company are their design and technology. Apple developers produce the product that has unique features and characteristic that different from other competitors. Due to the Apple product has strong values around quality, people are willing to pay for premium price to buy the product. Besides, it also has good customer services.

The second company or organizations that I think is most successful today is Walmart[2]. Walmart is the world’s largest retailer. As state on Walmart’s blog (2009), Walmart’s business strategy is overall cost leadership which is defined as offering the same or better quality product or service at a price that is lower than their competition. Most of the consumer would like to buy the product with low price and good quality especially the families and individuals with modest. So, one of the core competencies for Walmart is low cost operations. Walmart is able to keep its price low in the cutting edge technology, a frugal corporate culture and a push to make suppliers sell merchandise at cheaper and cheaper prices.

(239 Words)

Question Three

  1. Behavioral advantages

The first behavioral advantage that could arise is Surecut's managers are likely to accept the system and be motivated to attain the budget targets. They will perform better and try harder to achieve the targets since they were actively involved in setting the goals and know what is expected of them. (Langfield, Thorne and Hilton 2012, 430)

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Second, communication between managers and team cohesiveness would be improved because the managers would feel part of a team since they all are participating and discuss together.

  1. Potential problems

The first potential problem that could arise is the managers could be motivated to "pad" their budgets, putting slack in the plan to ensure meeting the goals or targets. (Langfield, Thorne and Hilton 2012, 431)

Besides, it might cause the hurt to cross-departmental employee due to overemphasis on departmental goals. For instance, if the target of the department is too high than other departments, the employee of the department will feel like difficult to achieve the goal and question about why their target is higher than others.

  1. Participatory budgeting can contribute to an organization’s goals by encouraging buy-in to the resulting budget and performance evaluation by the organization’s employees. By using this approach, it could encourage the motivation from the employees to achieve their own target. On the other hands, it will also bring the benefit to organizations if every employee from the organizations can achieve the goals. Besides, organization’s employees are the people who close to operations and have the best knowledge in their region and this would bring to the increasing in the accuracy of the budget estimates.(Langfield, Thorne and Hilton 2012, 430) Hence, there is no reason to believe that such an approach would not be beneficial for Surecut.

(293 words)

Question Four

  1. Jamphones is following a low cost strategy. Because the mobile has no added values and was available in the market which it can be found in others company too. Hence, to attract customer, Jamphones has to sell the mobile at the lowest possible price to compete with others. (Anthony, R. K. and Vijay Govindarajan. 2007,68)
  2. Prestige Computers is following a differentiated product strategy. The product is not standardized and the software that the company want to produce is new to the markets. The customer would willing to pay for premium price in order to get that software. (Anthony, R. K. and Vijay Govindarajan. 2007,68)
  3. Arvadam Pharmaceuticals is following a low cost strategy. The sunscreen was selling on discount price which means that low margins were earned from the sale. Earning high margins is not the primary concerned by the company. (Anthony, R. K. and Vijay Govindarajan. 2007,68)
  4. Tim’s Delicatessen is following a differentiated product strategy. Gourmet pasta sauce is a unique product which is made with the ingredients that is difference from others sauce. (Anthony, R. K. and Vijay Govindarajan. 2007,68)

(185 words)

Reference List:

Anthony, R. K. and Vijay Govindarajan. 2007. Management Control Systems. 12th ed. McGraw-Hill

Langfield-Smith, K., Helen Thorne, and Ronald W. Hilton. 2012. Management Accounting. 6th ed. NSW, McGraw-Hill.

The world’s most valuable brands. 2014. Forbes.

Walmart.2009, February 11. “Business Strategy” Blogspot.

[1] The further details and the product and services that produced for the Apple Inc. can refer to this website (

[2] The further details and the background of the that Walmart Company can refer to this website (