CHRISTIAN ROMAR H.

DACANAY
MBA - 1

Case # 1 (Springfield Corporation)

1) Discuss how the budgeting process employed by Springfield Corporation contributes to the
failure to achieve the president’s sales and profit targets.

The root problem in the failure to meet the president’s sales target is in the
management himself, specifically with the president himself. The president gave the
sales target solely to the Marketing department. By starting at the top management and
giving the command downward causes problems because not all of the management
functions are not involve in the decision making process. This method, if not coordinated
properly to all the departments may cause problems with the operations and production.

In establishing goals and allocating resources, the entire organization, all the
departments should be able to give their input, through this it will accommodate proper
coordination and better profits

2) Suggest how Springfield Corporation’s budgeting process could be revised to correct the
problems.

In the preparation and setting of budget, each level of management, and each
department should be invited to participate in the budgeting process. The approach
should be from the lower-level managers up to the top management, the budgeting
process should be participative that everyone are given the opportunity to give an input
to the process.
This is good because lower-level manager have more detailed idea on their specific
areas and would be able to provide accurate and reasonable estimates on the budget.
Secondly, with the implementation phase later on, lower-level managers would be able to
allocate the resources properly and reasonably and also be willing to make monitoring
and necessary corrective actions on the budget plan if they themselves are participants
of the budgeting process. The risk of having unrealistic budgets is greater when the
budget is developed from top management down.

3) Should the functional areas be expected to cut their costs when sales volume falls below
budget? Explain your answer.

The budget should put emphasis on the specific goal being targeted. If some
departments or units are into over budget and the sales is below the target, then there is
a need to cut expenses or cut the budget in order to allocate the resources properly. In
the budgeting process communication among the departments and among the lower-
level managers up to the top management is necessary for effective budget planning.
Case # 2 (Mrs. Miranda)

1. What should Mrs. Miranda have done before deciding to follow Mrs. Taruc’s example?

Mrs. Miranda should have assess her own interest in business, she should have
decide first as to what kind of entrepreneurial endeavor she would most likely to engage
into, she should have identified first the product or service for the business she wants to
start and not just copying or doing what others are engage in just only because the other
is profiting from it. In starting any business venture, one should asses his/her interest,
considering also the demand or need of the target market and the product or service to
offer.

2. What main factors should she have considered? Why are these factors necessary?

Mrs. Miranda should have considered the following and how it would affect her
business endeavor:
 First, she should have focus on the production aspect, she should have invested on
providing enough supply of feeds for the layers in order to meet the demand of her
market. By doing this, enough feeds would not impede the growth of the layers, thus
the laying period would be met.
 Second, considering she has a regular job, she should have hired someone who
would take care of the layers full time, with such she is sure that the day to day work
in her business is accomplish to have a smooth flow of operation or production.
 Lastly, she should have considered the location of her business. As a start-up who
needs careful supervision she should have put up the project maybe near her home
so that she can look into from time to time after her work, somewhere were the
supply of the business needs is proximate and accessible enough and it near her
target market so that in this case whatever number of produce at least she should
have sold something to earn even a little.

3. What would you advised her to do now if you were a management accounting
consultant?
If I were to advise Mrs. Miranda, she should make significant and careful assessment
regarding her business. She should make decision based on the factors to be
considered, she should decisions on the following: to continue the business or not, to
leave her job and go into business full time. For me, she should continue the business,
start-ups are really difficult at the beginning phase, she should continue the operations,
whatever it takes she should continue it and when production prosper, the same she
would be making revenue from it. It will just take some time, some sacrifice for needed
capital to cover up necessary cost that may be incurred.

4. What managerial accounting concepts should have been considered?

Mrs. Miranda should have done profit planning and capital budgeting, if she has no
knowledge then she should have consulted someone who is expert about it. She should
have employed necessary mathematical approaches to make the budgeting, in
conducting profit planning and in computing necessary forecast on revenues. Mrs.
Miranda should also have set her goals in order to make her directed and focus on what
she really wants her business to be and that is to gain revenue.
 Keri Kalani VS Granger Stokes

1. If I were to encounter someone someday like Granger Stokes, then out of respect, I
would be talking to him and present to him in a nice manner the real situation of the
organization. If ever he/she is not willing to listen, then I should be thinking of the
whole organization, the employees and stakeholders and not with the only one
person who turned things out of the balance. I should make necessary actions and
initiate change for the common good, I should do what is right and to make things
back to normal, any way people like Stokes are only after the profit.

2. If I were in Keri Kalani’s situation then, I should initiate change. Changing situations
in such a huge company and well established firm is very difficult but it is not
impossible. I could invite other employees or managers, who perhaps are now facing
problems due to the misbehaviour of Stokes. There might be a number of them and
would help me take the decision for a change. This could be brought by effectively
making some policies and regulations at the lower-level, and communicate it properly
to all in a participative approach so that every part of the production and operation
would be working coordinated and well.