Hanson Industries (B) Solution Format: Sections and Questions I. The essential nature of the case.

Hanson’s budgeting plan takes place from April to July. Denny Hanson, the president of Hanson Industries was checking the fiscal year (FY) 1979 Final Budget Revision that had just been finished in early July 1978 and was considering if the current budgeting processes were the most suitable for Hanson Industries. Learning from mistake from the past, he believed that a tighter budgeting process must be developed to help reduce the effect of unexpected events such as much lower orders than forecasted. From experience, Denny was confidence that based on forecasting results, Hanson can produce up to 60% of total orders in the earlier of production process. II. The major controllership issue(s) being addressed in the case (briefly). The main controllership concern that being addressed in the case is whether the design of Hanson’s budget is considerably as a flexible budget process that Hanson can rely on regardless unexpected events that could occur. Another issue were raised during the case is to provide timely budget and information for production process.


Answers to the case questions.

1. In a timeline format, trace the steps in the annual process of the development of the budget at Hanson Industries. Identify the key events over time that relate to the preparation of the budget. Record the date or time period at which each event takes place.

and the current market strengths of the dealer organizations -Review company's financial situation and the possible capital expenditures and future growth -Determine the sustainable rate of growth Oct-77 Operation Denny Hanson .President Chris Hanson .VP Marketing Pete Bloomer .VP Operation General managers of international operations -Determine the models and sizes of boots to produce -Set price for these models -Establish volume objectives -> Treasurer issues a memo documenting basic planning parameters for preparing the budget -> operation managers receives the memo and begin preparing their budget .VP Events -Review sales and marketing strategy.Treasurer Blaise Colt .VP new products Dave Snyder .Date Apr-77 Participants Denny Hanson .VP new products Dave Snyder .Executive VP Don Bertetto .VP Marketing Pete Bloomer .President Chris Hanson .Treasurer Blaise Colt .Executive VP Don Bertetto .

and revenues and profits -If there are any concerns or failure to meet the target revenue and profit.President Chris Hanson .Treasurer -Prepare the final budget revision: -Treasurer calculate the year's total orders taking into account 15% reorders.Executive VP Dave Snyder . capital expenditures. order cancellation and returns and come up with full budget. . Executive VP and President review three key areas: cash flow.Last week of November 77 Denny Hanson .Treasurer necessary Complete any adjustment and consolidate the final budget 30-Jan-78 Board of Directors Board of directors reviews the operation plan and approve preliminary budget Jun-78 Dave Snyder .Treasurer -Operation managers presents their department budget to Dave Snyder -Treasurer consolidates the results -Treasurer. President and the treasurer will discuss and negotiate with operating managers and make any changes 16-Jan-78 Dave Snyder . -Treasurer issues a memo to operating managers requesting their inputs for the final budget revision.

It also helps in shortening the budgeting process. what changes would you recommend to the planning/budgeting process used by Hanson? In our opinion. It will be a better benchmark because the management has the actual number of orders on hand. which takes more than a year to complete the Final Budget Revision. what changes. The planning process starts from April 1977. Therefore. Another issue that raises our attention is Hanson uses information from a year before the production actually happens to come up with the budget. 2. our recommendation that we have is the management should shorten the process to saves money and resources.End of first week of July 78 Dave Snyder .Treasurer Board of Directors -Treasurer finish final budget revision -Board of directors reviews the budget before submitting to the bank. should be made in the planning/budgeting process? . If Hanson grows as anticipated or diversifies. Given Hanson's history. economic environment and operating strategies. we think that Hanson’s budgeting process takes too long to complete. Hence. the information about the volume and market trends may be out of date. They should start the reviewing section around June where 85% of total orders were received. 3. finish in July 1978. if any.

Secondly. they should consider using external benchmarking to set control targets. it creates realistic targets and avoids negotiating improvements over last year. here are couples of suggestion that we have for their budgeting process: First.If Hanson grows as anticipated or diversifies. finance resource is an efficient tool that the management should take advantage of. . By implementing this method. which helps the improvements being made by the competition. The financial and statistical model building an abstract representation of a financial decision-making situation and it plays a great role in refining the forecasting budget model.

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.