1. Using Anthony’s Orchard case study, explain the difference between profit center and a cost center. Give an example of each type of center and categorize Anthony’s Orchard cost centers into the following categories: (1) Business Operations, (2) Administrative, (3)Management

2. Refer to Anthony’s Orchard case study. Prepare a YR 1 budget statement for the two highest budget cost centers. The budget statement should compare current year forecast to budget and calculate variances. Be sure to identify which specific variances are significant and need to be explained. A template has been provided below.

3. Explain the difference between a bottoms-up budget and an “Actual plus Adjustment” budget. Explain when each approach is justified.

4. Historically, depreciation expenses have not been recorded. Add an adjustment to the 5-Year Plan to depreciate total assets over 10 Years. For the balance sheet, assume that fixed assets have a remaining life of 4 years, and fully depreciate in Budget Year 4. Then explain why depreciation expense is relevant in a 5-year plan.

5. For the 2 cost centers presented in the internal file share site for Week 5, identify key financial metrics (KPMs) that need to be tracked as part of the monthly budget reporting process. Then explain the difference between financial, operational, and customer service metrics.

6. Prepare a 2-3 page report summarizing your responses. Include a critical analysis of Anthony's Orchard expense structure, specifically on the 5-Year Plan trend. For example, where do expenses appear excessive or too low given some of the long term objectives of the company and SWOT analysis priorities?

			Budget YR 1 - Cost Centers
Year 1 Budget	G/L Account	Management	Sales	Marketing & Events	Orchard & Production	Warehouse & Distribution	Finance & Administration	Total
Selling & Administrative Expenses	1300
Salary & Wages	1301	200,000	200,000	120,000	125,000	125,000	100,000	870,000
FICA & FUTA	1302	14,000	14,000	8,400	8,750	8,750	7,000	60,900
Employee Benefits	1303	20,000	20,000	12,000	12,500	12,500	10,000	87,000
Property Insurance	1304		-	-		-	18,000	18,000
Liability Insurance	1305	15,000	-	-		-	-	15,000
Professional Fees	1306	10,000	-	-		-	-	10,000
Legal Fees	1307	5,000	-	-		-	-	5,000
Personal Property Taxes	1308	-	-	-		-	9,100	9,100
Research & Development Cost	1309	25,000	-	-		-	-	25,000
Depreciation	1310		-	-		-	-	-
Total		289,000	234,000	140,400	146,250	146,250	144,100	1,100,000
Current Year Forecast		Current Year Forecast - Cost Centers
	G/L Account			Marketing & Events	Orchard & Production	Warehouse & Distribution	Finance & Administration
Selling & Administrative Expenses		Management	Sales					Total
Salary & Wages	1301	210,000	190,000	130,000	100,000	100,000	90,000	820,000
FICA & FUTA	1302	21,000	19,000	13,000	10,000	10,000	9,000	82,000
Employee Benefits	1303	8,400	7,600	5,200	4,000	4,000	3,600	32,800
Property Insurance	1304	-	-	-		-	15,000	15,000
Liability Insurance	1305	15,000	-	-		-	-	15,000
Professional Fees	1306	40,000	5,000	-		-	10,000	55,000
Legal Fees	1307	15,000	-	-		-	-	15,000
Personal Property Taxes	1308	-	-	-		-	10,000	10,000
R & D Cost	1309	5,000	-	-		-	-	5,000
Depreciation	1310
Other	1311	5,000	10,000	10,000	-	200	-	25,200
Total		319,400	231,600	158,200	114,000	114,200	137,600	1,075,000
Budget Increase (Decrease)		(30,400)	2,400	(17,800)	32,250	32,050	6,500	25,000

Template A14	Analysis of Forecast vs Budget for Cost Centers
		Cost Center 1					Cost Center 2
Account Description	Account #	Forecast	Budget	Variance	Variance		Forecast	Budget	Variance	Variance
				$	%				$	%
Selling & Administrative Expenses	G/L Account			Fav (UnFav)	Fav (UnFav)				Fav (UnFav)	Fav (UnFav)
Salary & Wages	1301	$ 9	$ 10	$ 1	10.00%		$ 9	$ 10	$ 1	10.00%
FICA & FUTA	1302			$ -	#DIV/0!					#DIV/0!
Employee Benefits	1303			$ -	#DIV/0!					#DIV/0!
Property Insurance	1304			$ -	#DIV/0!					#DIV/0!
Liability Insurance	1305			$ -	#DIV/0!					#DIV/0!
Professional Fees	1306			$ -	#DIV/0!					#DIV/0!
Legal Fees	1307			$ -	#DIV/0!					#DIV/0!
Personal Property Taxes	1308			$ -	#DIV/0!