5 The real-world (this company is based in the northwest suburbs of Chicago) scenario: 6 Your company assembles wire (light-metal) closet shelving units at a manufacturing facility and 7 ships them to home builders and chain "big box" do-it-yourself stores. It is October, 2023 (and it really is!) and you, the budget manager, 10 just received an e-mail from the CFO, asking you to put together a 2024 budget 11 12 The projected (because the year is not yet over) 2023 financial information is below. 13 There are three items for you to complete by filling in the applicable personalized information. 14 Then you need to prepare a 2024 budget by filling in the 2024 boxes below and submitting to the CFO 16 So how to get that done? 17 For a successful Master Budget, you would seek information and input (even if not very specific) 18 from your company's: 19 20 21 Sales Manager Production Manager Administration Manager 22 This input is provided further below: 23 24 Sales 25 26 Production Costs: 27 Direct Material 2023 Projected 2024 Budget $ 2,340,000 630,000 28 Direct Labor 420,000 29 Manufacturing Overhead 82,000 30 31 Other Expenses: 32 Sales commissions 468,000 33 Office/Mgmt. Salaries 335,000 34 Rent 140,000 35 Utilities 36 Supplies 37 All Other 38 39 Total costs and expenses 40 41 Net Income 42 18,000 25,000 50,000 2,174,000 172,000 Project 1 Master Budget + 4 Budget input from key personnel: SALES MANAGER The Sales Manager is in charge of sales of wire shelving in linear feet (the key metric for this business). with the role of soliciting and receiving orders from home builders and chain stores The following is projected sales data for (full year) 2023: 150,000 linear feet to the home builders market at a sales price of $10 per linear foot. 60,000 linear feet to the chain store market at a sales price of $14 per linear foot. In 2024, predicted higher interest rates is causing an expected decrease in sales to the home builders market. 7 However, in 2024 it is also predicted that inflated travel/vacation prices is going to cause 8 a small increase in sales to the chain store market (as more people "staycation" and work on home 69 improvement projects) 30 31 Sales prices (what is charged to the customers) may be changed if considered appropriate. 62 (but you would want to consider a change in sales price's effect on volume of sales) 63 64 Salespersons are compensated fully on commission based on sales dollars (and the 2024 commission rate 65 is expected to be the same as 2023) 66 67 PRODUCTION MANAGER 68 69 The production manager is in charge of assembly of these units in the assembly 70 facility adjacent to the office. 71 72 Production at the company facility is based on the assembly of the shelving by the linear foot.. 73 You assemble what you need to fill orders, since there is no space for unsold inventory. 74 75 The production manager is also responsible for procurement of the raw materials (metal). 76 You currently pay at a rate of $3 per linear foot, but your supplier is planning a price increase. 77 78 The production manager is also responsible for the assemblers that she directly supervises.. 79 They are paid by production at $2 per linear foot. 98 99 ADMINISTRATION MANAGER 100 101 102 The administration manager is in charge of basically everything at your facility except sales 103 and production. 104 105 A couple of the issues the administrative manager is working on include: 106 107 Hiring an administrative assistant to help implement the new accounts payable software. 108 109 Negotiating with the landlord - your lease is up in December and the landlord plans to increase the rent in 2024. 110 111 The 2023 full year rent is as follows: 113 based on the first letter of your last name: 114 A, B: $140,000