EXHIBIT 5

Part 1 - Private Information Known Only to the Operations Manager

As the Operations Manager, you are responsible for the Operations and Logistics Department of SRS Educational Supply Company. As such, you secure advertising that supports the sales efforts, coordinate shipping and delivery of merchandise to clients and provide general administrative support to the other departments. Further, you forecast and track most of the salary costs for SRS, even for staff outside of your department. This was done for budget building purposes only. As a member of the SRS senior management team, you are also actively involved in developing the master budget. You personally are evaluated based on how well you forecast operational costs.

You have estimated the companys monthly operating expenses for the next quarter (July September) as follows:

Variable:

Shipping 4.0% to 5.0% of sales with 5% of sales the most likely outcome

Other expenses 8.0% to 9.5% of sales with 8% of sales the most likely outcome

Fixed:

Salaries and wages $85,000 to $95,000 with $85,000 the most likely outcome

Advertising $45,000 to $58,000 with $50,000 the most likely outcome

Insurance $2,000 to $3,000 with $3,000 the most likely outcome

Depreciation $25,000

Your specific responsibility as a member of the management team is to prepare a selling and administrative budget and a schedule of expected cash disbursements by month and in total (July September). In addition, you must help the team compile the Budgeted Income Statement for the quarter and Budgeted Balance Sheet as of September 30. Finally, you may be asked to provide information to other team members that may help them complete their budgets and you may need to seek information from other team members that will help you complete your budgets.

CASE INSTRUCTIONS:

EXHIBIT 1

General Company Information Known by All Company Managers

SRS Educational Supply Company provides educational materials and supplies to educational institutions. The SRS business model is to be a one-stop provider of educational supply needs. For example, some of their product lines include educational workbooks, classroom visual aids, instructor support materials, art supplies, lab supplies, and administrative office supplies. While SRS serves all levels of educational institutions, the majority of their customers are K-12 schools. Sales can vary quite a bit from month-to-month as K-12 educational institutions have seasonal ordering patterns. Thus, budgeting is vital for planning and cash flow purposes. SRS has a June 30, fiscal year end.

The companys balance sheet at June 30 is given below:

Assets			Liabilities & Stockholders Equity
Cash	$ 40,000		Accounts payable	$ 130,000
Accounts receivable	340,000
Inventory	50,000		Capital stock	420,000
Prepaid insurance	18,000		Retained earnings	758,000
Building & equip. (net)	860,000		Total liabilities &
Total assets	$ 1,308,000		stockholders equity	$ 1,308,000

The companys income statement for the year ending June 30 is given below:

Sales		$ 5,523,000
Cost of goods sold		2,541,000
Gross margin		$ 2,982,000
Selling and administrative expenses
Shipping	$ 249,000
Other	511,000
Salaries and wages	1,104,000
Advertising	685,000
Insurance	27,000
Depreciation	228,000
Total operating expenses		2,804,000
Net operating income		$ 178,000
Interest expense		25,000
Net income		$ 153,000

EXHIBIT 1 (Continued)

General Company Information Known by All Company Managers

The following forecasts are known within the company (although each department may have better information than these forecasts):

Sales forecasts range

July $550,000 - $650,000

August $900,000 - $980,000

September $450,000 - $550,000

October $360,000 - $420,000

November $350,000 - $480,000

December $350,000 - $480,000

Purchasing cost range (July December)

Cost of goods sold 42% - 50%

Operating expense range (July December)

Shipping 4% - 5% of sales

Other expenses 8% - 9.5% of sales

Salaries and wages $85,000 to $95,000 per month

Advertising $45,000 - $58,000 per month

Insurance $2,000 - $3,000 per month

Depreciation $25,000 per month