Evaluating a Company’s Budget Procedures of Springfield Corporation

Budgeting

Evaluating a Company’s Budget Procedures of Springfield Corporation        in $9 only (Instant Download)

Source: Managerial Accounting by Garrison  11E  Chapter 9: Profit Planning

Springfield Corporation operates on a calendar-year basis.  It begins the annual budgeting process in late August, when the president establishes targets for the total dollar sales and the net income before taxes for the next year. The sales target is given to the Marketing Department, where the marketing manager formulates a sales budget by product line in both units and dollars.  From this budget, sales quotas by product line in units and dollars are established for each of the corporation’s sales districts. The marketing manager also estimates the cost of the marketing activities required to support the target sales volume and prepares a tentative marketing expense budget. The executive vice president uses the sales and profit targets, the sales budget by product line, and the tentative marketing expense budget to determine the dollar amount that can be devoted to manufacturing and corporate expenses, and then forwards to the Production Department the product-line sales budget in units and the total dollar amount that can be devoted to manufacturing. The production manager meets with the factory managers to develop a manufacturing plan that will produce the required units when needed within the cost constraints set by the executive vice president.

The budgeting process usually comes to a halt at this point because the Production Department does not consider the financial resources allocated to be adequate. When this standstill occurs, the vice president of finance, the executive vice president, the marketing manager, and the production manager meet to determine the final budgets for each of the areas.  This normally results in a modest increase in the total amount available for manufacturing costs, while the marketing expense and corporate office expense budgets are cut.  The total sales and net income figures proposed by the president are seldom changed.  Although the participants are seldom pleased with the compromise, these budgets are final.  Each executive then develops a new detailed budget for the operations in his or her area.

None of the areas has achieved its budget in recent years.  Sales often run below the target.  When budgeted sales are not achieved, each area is expected to cut costs so that the president’s profit target can still be met.  However, the profit target is seldom met because costs are not cut enough.  In fact, costs often run above the original budget in all functional areas.

The president is disturbed that Springfield has not been able to meet the sales and profit targets.  He hired a consultant with considerable experience with companies in Springfield’s industry.  The consultant reviewed the budgets for the past four years.  He concluded that the product-line sales budgets were reasonable and that the cost and expense budgets were adequate for the budgeted sales and production levels.

1. Discuss how the budgeting process as employed by Springfield contributes to the failure to achieve the president’s sales and profit targets.

Sample Answer:

The budgeting process as employed by Springfield contributes to the failure to achieve the president’s sales and profit targets. The root cause of failure lies in the budgeting of the Marketing Department where targets (sales quotas and budget is distributed at the same time. The marketing expense budget is bound to fail because the allotment of budget does not automatically lead to sales and profit targets. Further, the sales and profit targets cannot be used to set manufacturing and corporate expenses…..

2. How would you change the cost measurements?

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MGT521 Management: Week 2 All DQs and Assignments

Course fees discounted: Each competency unit h...

MGT521 Management: Week 2 All DQs and Assignments

Week 2 Assignments
Learning Objectives
Argument and Collaboration

•    Construct and support an argument.
•    Explain how perception affects decision making.
•    Explain the importance of clear communication in business.
Required Reading
1.     Read the Student Road Map, available on the resource page.

2.    Read Ch. 15 of The Student Writer.

3.    Read Ch. 5 & 11 of Organizational Behavior.

4.    Read Student Evaluation and Feedback, available on the resource page.

5.    Read To APA or Not to APA, That is the Question, available on the resource page.

6.    Read Academic and Professional Use of the Works of Others, available on the resource page.

MGT521 Management: Week 1 All DQs and Assignments

Assignment: Reduce & Simplify

Week 1 Assignments 

Learning Objectives

•    Identify program outcomes for the University of Phoenix MBA.
•    Identify managerial competencies.
•    Use tools available to University of Phoenix graduate students.
Required Reading
1.     Read the Student Road Map available on the rEsource page.

2.    Read Dean’s Welcome available on the rEsource page.

3.    Read Strategy for Reading College Materials, available on the rEsource page.

4.    Read Ch. 2 of Leadership in Organizations.

5.    Read Materials posted in course materials.

6.    Explore the OLS Training Tutorial available for your appropriate modality (Online & FlexNet or Local Campus) under the menu “Site Tools” after you login to the Resource page.

ISCOM 305 Complete Week 5

ISCOM 305 Entire Week 5

Parker Earth Moving Company Consulting Technology

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ISCOM 305 Week 4: Taylor Inc., Widget Production

Taylor Inc. manufactures widgets. There is a particular assembly line for Widget X. This assembly line includes the assembly of various raw materials, subassemblies, and packing of the finished widget. Currently, approximately 27% of the total labor time is utilized in walking by assembly line personnel to obtain the needed parts required to accomplish their assigned tasks. The average hourly cost,

English: Orange Unimog U400 on the assembly li...

including all benefits, is $43 per hour. Seventeen people are required on the assembly line. Lifting containers that weigh approximately 42 pounds is required in several of the respective tasks. The current output of finished widgets is 208 per 8-hour shift. The company incurs an average of four worker’s compensation claims per year in back injuries due to lifting. An average claim equals $109,000 and the employee is out for an average of 280 hours. The injured worker must be replaced to sustain production. By improving the physical layout, productivity may be improved and worker’s comp claims reduced. Two layouts have been proposed.

Alternative One reduces wasted motion (walking) to 1% of total labor used on the assembly line. Physical lifting is reduced to no more then 12 pounds. Six people will be required on the assembly line. Productivity in finished goods per 8-hour shift will increase to 392. It is anticipated that worker’s comp claims will be reduced to .3 per year; however, a capital investment of $1.3 million is required in robotics and mobile storage carts. Useful life of the equipment is 7 years.

Springfield Express: Various Break-Even Point Calculation

English: Passenger train for Wisbech

Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available:

Number of seats per passenger train car 90
Average load factor (percentage of seats filled)        70%
Average full passenger fare     $160
Average variable cost per passenger     $70
Fixed operating cost per month  $3,150,000
What is the break-even point in passengers and revenues per month?
What is the break-even point in number of passenger train cars per month?
If Springfield Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars?
(Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars?
Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000?

Top Switch Inc.:Calculate cost in the Raw Materials, Work in Process, and Finished Goods Inventory

SMU School of Accountancy

Top Switch Inc.:Calculate cost in the Raw Materials, Work in Process, and Finished Goods Inventory in US$ 8 only                         (Instant Download)

Top Switch Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout the state of Tennessee affected Top Switch’s facilities. Inventory was completely ruined, and the company’s computer system, including all accounting records, was destroyed.

Before the unfortunate incident, recovery specialists cleaned the buildings. The company controller is very nervous and anxious to recover whatever records he can to support the insurance claim for the destroyed inventory. After consulting with the cost accountant, they decide to retrieve the previous year’s annual report for the beginning inventory numbers. In addition, they also agreed that they need first quarter cost data.

The cost accountant was working on the first quarter results before the storm hit, and to his surprise, the report was still in his desk drawer. After reviewing the data , the information shows the following information: Material purchases were $ 325,000; Direct Labor was $ 220,000. Further discussions between the controller and the cost accountant revealed that sales were $ 1,350,000 and the gross margin was 30% of sales. The cost accountant also discovered, while sifting through the information, that cost of goods available for sale was $ 1,020,000 at cost. While assessing the damage, the controller determined that the prime costs were $ 545,000 up to the time of the damage and that manufacturing overhead is 65% of conversion cost. The cost accountant is not sure about all of this, but he decides to see what he can do with the information.

Clark Paints: Calculate Annual cash flows, Payback Period NPV & IRR

Clark Paints: Calculate Annual cash flows, Payback Period NPV & IRR

Clark Paints: The production department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost $200,000, with a disposal value of $40,000, and it would be able to produce 5,500,000 cans over the life of the machinery. The production department estimates that approximately 1,100,000 cans would be needed for each of the next five years.

The company would hire three new employees. These three individuals would be full-time employees working 2,000 hours per year and earning $12.00 per hour. They would also receive the same benefits as other production employees, 18% of wages, in addition to $2,500 of health benefits.

It is estimated that the raw materials will cost 25¢ per can and that other variable costs would be 5¢ per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted.

Identify Linguistic Political Social Economic Status of Four Hispanic Groups

Four Hispanic Groups

Identify Linguistic Political Social Economic Status of Four Hispanic Groups

Write a 1,050- to 1,400-word research paper identifying the linguistic, political, social, economic, religious, and familial conventions and/or statuses of four Hispanic groups living in the United States. Your paper should cover Mexican Americans, Puerto Ricans, and two groups of your choice from Chapter. 9 of the text.

  •  Dedicate an equal portion of your paper to each Hispanic group.
  •  Conclude your essay by summarizing major differences and commonalties apparent among the groups

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