PROJECT 1: MASTER BUDGET The real-world (this company is in the northwest suburbs of Chicago) scenario: Your company assembles wire (light-metal) closet shelving units at a manufacturing facility and ships them to home builders and chain "big box" do-it-yourself stores. It is October, 2021 and you, the budget manager, just received an e-mail from the CFO, asking you to put together a 2022 budget. The projected (because the year is not yet over) 2021 financial information is below. There are three items for you to complete by filling in the applicable personalized information. Then you need to prepare a 2022 budget by filling in the 2022 boxes below and submitting to the CFO. So how to get that done? For a successful Master Budget, you would seek information and input from your company's: Sales Manager Production Manager Administration Manager This information (reflecting some real-world vagueness and uncertainty) is in the detail further below: 2021 Projected 2022 Budget sales $ 2,400,000 h Production Costs: Direct Material 630,000 Direct Labor 420,000 Manufacturing Overhead (you fill in) Other Expenses: Sales commissions 480,000 Office/Mgmt. Salaries 325,000 Rent 156,000 Utilities 9,000 Supplies 25,000 All Other 60,000 Total costs and expenses (you fill in) Net Income (you fill in) 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).. She solicits and receive orders from home builders and chain stores The following is projected sales data for (full year) 2021: 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 $15 per linear foot. In 2022, the home builders market is expected to improve ("a little") over 2021 However, COVID-19 had a favorable impact on the chain store market as more people had more time to work on home improvement projects in 2020 and 2021. This is expected to "decline significantly" in 2022 as people are tired of being at home and home improvement projects!. Sales prices (what is charged to the customers) per linear foot are planned to remain the same in 2022. Salespersons are compensated fully on commission (and the 2022 commission rate is the same as 2021).

PRODUCTION MANAGER The production manager is in charge of assembly of these units in the assembly facility adjacent to the office. Production at the company facility is based on the assembly of the shelving by the linear foot. You assemble what you need to fill orders, since there is no space for unsold inventory The production manager is also responsible for procurement of the raw materials (metal). You currently pay at a rate of $3 per linear foot, but your supplier is planning a price increase. The production manager is also responsible for the assemblers that she directly supervises. They are paid by production at $2 per linear foot. The production manager earns an annual salary (which is the entire manufacturing overhead). That salary (unique to each student in the class, evidently some are more generous than others!) is as follows: Kassie: $53,000

John: $55,000

Aidan: $57,000

Mike: $60,000

Christian: $62,000

Sakai: $64,000

Maggie: $66,000

Patty: $68,000

Will H. $70,000

Tori: $72,000

Amber: $74,000

William M. $76,000

Marko: $78,000

Jen: $80,000

Hannah: $81,000

Natalia: $82,000

Angela: $84,000

Awilda: $85,000

Roberto: $86,000

Melissa: $88,000

Marcus: $89,000

onathon: $90,000

Sean: $92,000

Jes: $95,000

However, in each of the salary scenarios above, the production manager wants a raise next year! Reminder: direct material and direct labor are both variable costs - An appropriate budget would be based on expected cost per linear foot produced.

ADMINISTRATION MANAGER The administration manager is in charge of basically everything at your facility except sales and production. A few of the issues she is working on include: Negotiating with the landlord - your lease is up in December and she wants to increase the rent. Hiring an administrative assistant to help implement the new accounts payable software Dealing with increase worker's comp insurance (in "Other") due to an "accident". In addition, provide a 200-300 word description (either within the same document or a separate document such as Word, or in "Write Submission" tab/area, your choice!) that specifies how you determined the 2022 Sales Budget (for each of the two markets) and the assumptions, as well as how you determined the numbers for all of the costs and expenses budgeted for 2022. In other words, clearly show how you arrived at all of the numbers that you entered into the 2022 boxes, do NOT make instructor (or in the future, your supervisor, company controller or CFO) go on an analytical safari to try to figure it out! (Frustrated CFOs who need further explanations on budget numbers is common at this time of year!) If using an Excel document, please make it in an easily printable (watch margin settings, etc.) format.