Managerial finance and accounting

HK Corporation Report

HK Corporation is an organisation that produces plastic products. The products are standard items which are all placed in the company's catalogue. Some products can be made to customer specifications. In this report, I will be evaluating and suggesting how HK Corporation could assess their budgeting process within their organisation. In order to achieve this I will be discussing the case study on five points which will help reach a conclusion on how to do this. The first point to be discussed is how the corporation fails to achieve the managing directors' sales and profit targets. Secondly, how the budgeting processed could be modified to correct the problem. Thirdly, how should costs cut when sales volume falls below budget. The fourth point to be discussed is how motivation and behaviour affects the organisation in relation to standard costs and the variance reporting system. Finally, I will be describing the benefits of a standard cost system and also finding ways of improving the standard cost and variance reporting system to increase employee motivation.

Firstly, the budgeting process within HK Corporation is failing to address the key success factors which are preventing the organisation to meet the sales and profit targets that are set by the managing director. This is because as the marketing manager sets the expense budget, this then starts a process which goes down to the operations manager who then uses this to set their own expense budget and finally the production manager who does the same. In the case study it states that the marketing manager "prepares a tentative marketing expense budget". This means that the budget has not been worked out thoroughly or been agreed on by the other department managers. This has therefore resulted in the production manager to assess the budget and has decided that the department did not have enough financial resources to continue. This then caused a standstill which had contributed to the amount of time wasted as they had to re-develop a new budget for each of the departments. The problem that contributes to this failure is that they are not using their 'time' efficiently in relation to the targets set within the organisation, as they had used too much time in proposing a budget which had failed and had to create a new one to meet everyone's needs.

To correct this problem created by the organisations budgeting process, a solution is available. Firstly, the need for teamwork and communication is a must; without teamwork the problem of time being 'wasted' will continue to re-occur over time and the lack of communication will also lead to rash and inaccurate decisions being made which can be seen. Teamwork can be achieved by arranging a meeting for all managers to come together so that the budget can be discussed as a group rather than each individual making the decision themselves. I think that this will eradicate the problem at hand because the mistake the organisation kept making was that each manager would estimate the budget each time themselves which slowed the organisation down to a standstill due to incorrect figures being taken down. This would mean that the company would carry on losing money each year. By tweaking the budgeting process ever so slightly of this organisation, even by acquiring all the managers together for a quick and simple meeting would result in more accurate and reliable budgets that will save time and make the company a lot more 'time efficient'.

Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!