Julianne Smith is a CFO for Hilcon Concrete (HC), a manufacturing company, headquarter is located in Montreal. HC has seven concrete product plants located throughout Ontario and Quebec provinces. The company has recently switched to decentralized organizational structure and centralized accounting and finance. They created a new organization called Quebec-Ontario Financial Services (QOFS). This new organization is responsible to support HC with all accounting and financial services.

 

In the past, the company did not try to measure profitability at each plant. Under the new organizational structure, each concrete manufacturing plant is headed by a general manager, who has responsibility for operating the plant like a separate company.

 

Julianne has asked the accounting manager,John M. to organize a small group to be in charge of performance analysis. This group is to prepare monthly reports on performance for each of seven plants. These reports consists of budgeted and actual income statement. Written explanations and appraisals are to accompany variances. Each memberof John’s group has been assigned to one specific plant and is encouraged to interact withmanagement and staff in that plant in order to become familiar with operations.

 

After few months, the CFO began receiving complaints from the general managers at several of the plants. Common too many of these complaints is the observationthat John’s staff members are interfering with operations and, in general, are “getting in the way”. In addition, the managers worry that someone is constantly “looking over their shoulders” to see if they are operating in line with the budget. Two plant managers have pointed out that the performance analysis staff is trying to do should be done by them (explanation of variances). AsMatthewGlean, one of the most vocal plant managers, stated, “How can these accountants explain the variances when they don’t know anything about the industry? They don’t know what’s happening with our suppliers or our labor unions, and they have not got a clue about relationships with our customers”.

 

The president of HC has also complained about the system for performance evaluation reporting.

 

Requirements

 

From the above information stated about HC, evaluate the situation of this company according to the following

 

- Cost – Benefit balance

 

- The decisions they need to take?

 

- Information they need to make these decisions?

 

- The way to gather and process the data needed?

 

Key solutions:

 

Improve Quality and Reduce Costs

 

Identify situations that require action.

 

Provide alternative choices.

 

Reduce uncertainty.

 

Provide feedback on previous decisions.

Provide accurate and timely information