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MCS 301 – Portfolio Questions, Semester 1, 2014 Page 1 of 3
Management Control Systems 301
Semester 1, 2014
Portfolio questions
Question One
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.
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.
(Word limit for answer to Question One: 250 words)
(Total: 5 marks)
Question Two
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).
(Word limit for answer to Question Two: 250 words)
(Total: 4 marks)
MCS 301 – Portfolio Questions, Semester 1, 2014 Page 2 of 3
Question Three
Colin Currant started Surecut Mowing Services a number of years ago to provide mowing services to
both local businesses and households. Over the years, Colin expanded the business and started
providing landscape and reticulation services.
Surecut maintains a pool of skilled workers who are contracted to perform the landscaping and
reticulation services because these services do not occur on a regular basis. Many of Surecut’s fulltime
employees have been with the firm for a number of years. Five zone managers are each
responsible for providing recurring mowing services. In addition, the zone manager sells and
schedules non‐mowing jobs for the company’s central pool of skilled employees. Informal meetings
are held periodically to discuss Surecut’s performance, personnel allocations and scheduling
problems. Surecut’s budgeting and planning have been done by Colin, who also manages variations
from budgets.
Colin recently decided to retire and sold the business to Commercial Mowing Services which
provides similar services in a number of metropolitan locations that surround Surecut’s business
area. When they heard the news of the sale, several of Surecut’s long‐term employees appeared
resentful of the change in ownership and did not know what to expect.
Commercial Mowing Services’ senior management met with Surecut’s managers and announced
that Victor Briggs would become president of Surecut and that Surecut would continue to operate as
a separate subsidiary of Commercial Mowing Services. Furthermore, in accordance with
Commercial’s management philosophy, a responsibility accounting system is to be implemented at
Surecut. Also, in line with other Commercial subsidiaries, a participatory budgeting process is being
considered. However, no decision will be made until an evaluation of Surecut’s existing policies,
operational culture and management is completed. In view of the significant change in management
philosophy, Commercial has taken considerable time in explaining how each system operates and
assuring Surecut’s managers that they are expected and encouraged to participate in both the
planning and implementation of any of the systems that are to be adopted.
For the participatory budgeting system initiative being considered for Surecut Mowing Services:
1) Identify two behavioural advantages that could arise. (2 marks)
2) Identify two potential problems that could arise. (2 marks)
3) Discuss the likelihood that the new approach will contribute to the alignment of
organizational and personal goals. (4 marks)
(Word limit for answer to Question Three: 300 words)
(Total: 8 marks)

MCS 301 – Portfolio Questions, Semester 1, 2014 Page 3 of 3
Question Four
The each of the following independent situations, state whether the company is following a low cost
or a differentiated product strategy and explain your answer.
a) Jamphones is about to decide whether to launch production and sale of a mobile phone with
standard features.
b) Prestige Computers is trying to decide whether to produce and sell a new home computer
software package that includes the ability to interface with a sewing machine and a vacuum
cleaner. There is no such software currently on the market.
c) Arvadam Pharmaceuticals has been asked to provide a ‘store brand’ roll on sunscreen that
will be sold at discount retail stores.
d) Tim’s Delicatessen is entertaining the idea of developing a special line of gourmet pasta
sauce made with sundried tomatoes, mushrooms and truffle oil.
(Word limit for answer to Question Four: 200 words)
(For each part, one mark for identifying the strategy and one mark for explanation. Total: 8 marks)

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