Cariman Limited is a manufacture of special plant pots. Cariman has the following budgeted sales for the next six-month period: Month Unit Sales June 45,000 July 60,000 August 105,000 September 75,000 October 90,000 60,000 November There were 15,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five kilograms of materials are required for each unit produced. Each kilogram of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 7,500 kilograms.
Cariman contracts delivery drivers to service customers. Cariman owns the vans and pays for the gas. With reference to the following independent situations for Cariman, determine where (a) responsibility and (b) controllability lie. Suggest what might be done to solve the problem or to improve the situation:
1. Gasoline costs for each van are budgeted based on the service area of the van and the amount of driving expected for the month. The driver of van 3 routinely has monthly gasoline costs exceeding the budget for van 3. After investigating, the service manager finds that the driver has been driving the van for personal use.
2) Cariman’s delivery drivers are paid an hourly wage, with overtime pay if they exceed 40 hours per week, excluding driving time. Speedy Gonzales, one of the delivery drivers, frequently exceeds 40 hours per week. Customers are happy with Speedy’s work, but the delivery manager talks to him constantly about working more quickly. Speedy’s overtime causes the actual costs of delivery to exceed the budget almost every month.
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