Budgeting Decisions: Identifying Criteria and Data Required.

Dandy Panda has its own advisory division that sells internal and external advice to other toy manufacturers with two conditions: (1) the Client must not be in a position to compete with Dandy Panda in any of their markets and/or products and (2) Serves Pandas consultants to integrate other processes into their own firm by following one of the most popular advisory rules of learn while teaching.

Its internal consulting firm has a professional staff of 10, giving it a capacity to provide 1,500 hours of consulting service in an average month. Commitments to and from the company's present internal and external clients will require the firm to provide them with approximately 1,000 hours of service in each of the next six months, yielding revenues of approximately $40,000 a month and project-related expenses of $10,000 a month. Salaries of the professional staff amount to $25,000 a month; rent, and other office expenses average $8,000 a month.

The firm would like to submit bids for four additional consulting projects to be completed during the next six months. The staff have been working closely on these with the prospective clients and are quite convinced that the firm will be given the assignments if it can promise completion within the six-month period.

The estimates for these four projects are as follows:

TABLE 3: Dandy Panda 4 advisory projects in course (USD/month)

Project A Project B Project C Project D

Hours per month. 125 250 375 450

Consulting fees to be charged

to Clients each month. $5,000 $6,000 $16,500 $22,500

Unreimbursed project expenses per

month (other than salaries of

professional staff, rent, and other

office expenses). $100 $500 $7,500 $9,000

You are requested to analyze and respond the following questions:

a. What should the firm do? Show your calculations.

b. What criterion or criteria did you use in reaching your conclusions?

c. What other kinds of information about these projects would you, as the budget officer, find useful and perhaps essential in the development of a budget for the next six months?