Question

United Forest Products (UFP) is a large timber and wood processing plant. UFP's performance-evaluation system pays its managers substantial bonuses if the company achieves annual budgeted profit numbers. In the last quarter of 2013, Amy Kimbell, UFP's controller, noted a slight increase in output and a significant decrease in the purchase cost of raw timber.
One day when Kimbell was at the log yard where timber is received and scaled (weighed and checked for quality) to determine what UFP pays for it, she noted that a timber contrac tor was quite aggravated when he was given the scale report (board feet and quality). When she asked one of the scale employees what was bothering the contractor, he revealed that the scalers had received instructions from their supervisors to deliberately "lowball" evaluations of timber quantity and quality. This reduced the price paid to timber suppliers, which also reduced direct material costs, helping UFP to meet its profit target.
REQUIRED
1. What should Kimbell do?
2. Which lever of control is UFP emphasizing? What changes, if any, should be made?


$1.99
Sales0
Views27
Comments0
  • CreatedJuly 31, 2015
  • Files Included
Post your question
5000