In March 1991, Russ Lesser, president of Body Glove, a small wetsuit manufacturer, reviewed the progress his company had made, as well as the problems it had encountered, in the nine months he had been president. The company was performing well: it was profitable and was ranked number two in market share in the wetsuit industry. But Russ knew that he and his newly appointed management team could not afford to be complacent. The wetsuit industry was highly competitive and the markets were complex, with rapid growth, fashion conscious customers, and seasonal demand. Much of Body Glove's success depended on its ability to respond quickly and in a coordinated fashion to changing market conditions. These responses should be facilitated by the company's management processes, and Russ wondered if the company had the right processes in place.

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Questions
1. For what purposes does Body Glove use its budgeting system? Which purposes are emphasized?
2. Trace the steps in the development of the budget at Body Glove. What are the key events that relate to the timing of the steps in the budgeting process?
3. The case says that Body Glove never prepared a budget prior to fiscal year 1991. How can a company like Body Glove function effectively without a budget, or can it?
4. What changes to Body Glove's budgeting and review processes would you recommend, if any?
5. If Body Glove continues to grow and, perhaps, diversifies, what changes will have to be made to the budgeting and review processes?

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EXHIBIT 2 Body Glove: Product Line Overview Surfing Cold water full suits, jackets and legsuits; springsuits; and warm water Triathlons Waterskiing and jet Skiing wetsuits Triathlon wetsuits Cold water full suits, jackets and legsuits; springsuits; vests; trunks, and warm water wetsuits Diving Wetsuits Cold water full suits, combination wetsuits, warm water divesuits, vests, and hoods Cold water full suits, jackets and legsuits, waders, and vests Whitewater Sport Wetsuits Accessories Ski and Snowboard Line Orthopedic Products Surf accessories, booties, gloves, hoods, and miscellaneous accessories Neoprene pants, neoprene bibs, neoprene jackets, and snow accessories Braces, pads, gloves, supports, shorts, and miscellaneous accessories FIGURE 1 Timing of Order Cycle Phases Order Phase Fall Line Spring Line Pre-book Build Deliver ctober-November November December January-june May-June June-July September-December EXHIBIT 3 Body Glove Income Statement Actual versus Budget Comparison for Dive "n Surf, Inc. July 1992 and 1992 Year-to Date Current Month YTD Actual BudgetDifference Actual Budget Difference Dive Shop Redondo 36,873 49,050 (S 12,177) S 249745 290,350 ( 40,605) $ 27,464 6,700 $ 20,764 60,312 $ 3,900 $56,412 Del Amo 8,839 33,804) S 7,000 ( 20,804) 2,705 4921) 16,001 12,724 45,490 32,500 12,990 5 32,108 7S,500 ( 43,392) 5 37,448 5 9,500 $ 27.948 52819675 66,500 $213.467 48,609 $ 151,200 (102,591) $1,205,368 $1,500,150 (294,782) 24,334 35,675 (S 11,341) 228,629 292,825 ( 64,196) 5 6,456 3,000 3,456 33,470 21,000 12,470 34,281 36,750 (S 2.469) 213,031 215,063S 2,032) 29,453 5 189,100 (159,647) (S 5,005) 4,874 5 5,000 (S 126) 3,139 1,000 2,139 25,239 16,400 Charters Rentals & Repairs Royalties BGWT BGAD BGTS Factory SG Wetsuits SAS DNS ORTHO Accessories Shoes BGSM Sales Support Art & Design G&A Corp, O/H Other Income 6,275 23,70S21,000 223,920 175,632 48,288 1,087,871 $1,092,792 5 4,167 (S 12,167) 16,334 (S 69,166) (5 85,167) S5,170 $ 5,655 (S 485) 28,936) ( 41,660) 7,500 ( 1,225) (S 7,534) 5 25,800 (5 2,468) S 6,024) 33,334) (S 2,468) ( 5,005) 400 (S 6,424) 46,657)63,175 (5 109,832) (S 27,991) ( 27,000) 991) ( 185,930) (S 189,000) 3,070 (5 14,469) (S 11,800) (S 2,669) ( 88,736) ( 82.600) 6,136) 40,110) (1,492,467) ($1.452,700) ( 39,767) (S 55,750) ( 74,400) 18,650 ( 474,900) ( S20,800) 45,900 5 14,174 7,500 6,674 89,705 S 52,500 37,205 603.203) ( 561.250) 41.953) 118,493 $188,395 ( 69.902) $ 551,799 S 974,078 422,279) (5 244,210) (S 204,100) Other Expenses ( 45,735) ( 35,000) 10.735) Net BGAD Bedy Glave Advenising GSM Body lhve Sales and Mg