Art Printing Australia Pty Ltd ('APA') is an innovative industrial design firm providing realistic 3D digital imaging using the latest drafting technology. Sophia Smith founded the firm in 2005. She has seen it grow gradually over the last two decades. It now employs 25 designers and 12 support staff. Ten years ago, Sophia decided that she was spending too much time managing the firm and not enough time designing and interacting with clients. She appointed Gloria Jensen as the general manager of APA. Gloria's management style focuses on control. She believes that a business organisation is like a finely tuned machine. Everything must be planned and then executed as planned. There should be no surprises. Design and drafting technology is advancing quickly. Sophia and other senior designers have discussed the feasibility of adopting a 'paper free' policy and introducing 3D printing, but Sophia has been reluctant to make the move. 3D printing would enable APA to produce realistic and timely 3D models, which will, in turn, facilitate more refined designs through more effective consultations and collaboration with clients. On occasions, designers have conducted design reviews and provided feedback online rather than on paper, but minor glitches in the hardware tend to frustrate their efforts. The move would require significant hardware and software upgrades, as well as more technical support. Allocating the required resources may require reduced spending in other areas such as marketing, training, etc. Sophia knows that in the long run, embracing these emerging technologies is essential for operational efficiency and service guality. It is just a matter of finding the funds required. She intends to make a move within the next year. Gloria has focused on achieving profit targets over the last 6 years. Resources are allocated where they are needed, and some spending is tightly controlled. If spending on a particular item comes in over budget, the person responsible is reprimanded and their future spending is carefully scrutinised. If spending is under budget, then the allocation is in excess of what is needed and is revised downward for subsequent periods. Gloria finalises the budget for the current year immediately after receiving the financial reports for the current year. Gloria uses current year immediately after receiving the financial reports for the current year. Gloria uses budget information and variances for employee performance evaluation and bonus allocation, and her bonus is calculated based on the planned net profit. Sarah Lee, is responsible for training and IT. Sarah planned this year's spending meticulously. But she is having trouble executing her plans. Eight designers were scheduled to receive advanced training on the latest 3D design software in May 2022. Two candidates, and APA's most productive designers, Maria and Chloe were busy with increased work in 2022. Another candidate, Amelia needed the new software for a project that was due in March 2022, so she taught herself how to use the new software by working through the manual. Amelia has since completed four projects using the software. She now has a busy workload and does not want to attend the training in May as well. Sunday, 30 June 2022 is the end of the financial year and is fast approaching. Sarah is worried that her spending on training may end up being 30% below budget so the resources under her control may be reduced next year if not spent in 2022. She was having lunch with one of the software sales reps recently when he mentioned that he would be attending a seminar on negotiating skills and contract law. The conference will be held in June 2022 at a luxury resort on the Gold Coast. Sarah asked Amelia if she would like to attend. Amelia was delighted. Sarah also acquired a new software package for customer relations management (CRM) and stocked up on paper and ink for the printers. She is now more confident about her performance appraisal with Gloria in June. e o Gloria herself was also concerned about the total fixed support department and general office costs thus she requested to increase the sales volume through an advertising campaign aiming at increasing the profit. She is now confident about the profit and is more confident about her performance appraisal with Sophia in June. The demand for APA's services has been great in 2022. APA Pty Ltd Budget report for the year ending 30 June 2022 Static Budget Actual No. of 3D models sold 12,400 14,100 Revenue $10,168,000 $11,340,000 Production costs: Variable costs- Direct ($2,294,000) (52,700,000) labour Other variable costs (5768,800) (5921,000) Contribution margin $7,105,200 $7,719,000 Fixed overhead ($1,800,000) (51,850,000) Rent ($630,000) (5606,000) General office expense ($820,000) (S930,000) Support department costs ($3,200,000) ($3,500,000) Profit $655,200 $833,000