Question 1
F.T. Electronics Company manufactures GPS devices for the fishing industry. In recent months, demand for the company's products has fallen and, as a result, the firm's production has been reduced significantly. Many unskilled workers have been temporarily laid off. However, top management has made a decision not to lay off any highly skilled employees, such as inspectors and machinery operators. Management was concerned that these highly skilled employees would easily find new jobs elsewhere and not return when production returned to normal levels.
To occupy the skilled employees during the production cutback, they have been reassigned temporarily to the Service Department. Here they are performing general service tasks, such as servicing equipment, repairing any equipment, and providing support to customers who have any questions on how to use the equipment. The skilled employees continued to receive their normal
wages, which average $26 per hour. However, the normal wages for Service Department employees average $15 per hour.
The supervisor of the Service Department recently received the February performance report which indicated that his department's labour cost exceeded the budget by $28,659. The department's actual labour cost was approximately 90% over the budget. The department supervisor complained to the controller.
Required:
As the controller, would you make any modification in F.T. Electronics' responsibility-accounting system? If so, what are the changes you would make (who should be held responsible for the budget)? Explain your answer.
Question 2
Identify two of the most successful companies or organizations today, in your opinion. Explain why they are so successful (your answer should consider business strategy and core competencies).