The General Manager and The Consultant

Purpose: This assignments will assess knowledge of qualitative factors relating to differential analysis. The assignment is related to CLO5: Identify, construct, and appraise budgets for effective management.

Requirement: After reading all budgeting resources and viewing the videos, answer the following question 4 questions. If a narrative is required, create answers in your own words, using complete sentence structure and grammar. Please use citations if applicable.

Part I: The General Manager

1. Your budget analysis is out on FMLA and as a general manager, you need to prepare a quarterly budget for your company. You are budgeting a sales price of $110 per unit and they estimate they will sell 150 units in October and unit sales will increase by 5% each month after that. How many units are estimated to be sold in October, November, and December? (Round to nearest whole units and nearest whole cent.)

	Sales in Units	Sales in Dollars
October
November
December
Total for the quarter

2. Using the Sales from above you will now estimate the selling expense budget for the quarter. The sales manager makes $50,000 per year plus a 10% commission from all sales made during the month. Complete the chart below to determine the selling expense for each month and the total for the quarter. (Round your answers to the nearest whole cent.)

	October	November	December	Total
Sales Commission (10%)
Manager Salary ($50,000/yr)
Total Selling Expenses

Part II: The Consultant

3. You are reviewing a flexible budget report for a company. Indicate whether each variance in ABC Contractings Flexible Budget Report below is either Favorable or Unfavorable.

	(24,000 units)	(24,000 units)
	Flexible Budget	Actual Results	Variance	Favorable or Unfavorable
Sales	$960,000	$972,000	$12,000
Variable Costs	192,000	240,000	48,000
Contribution Margin	768,000	732,000	36,000
Fixed Costs	500,000	490,000	10,000
Net Income	$268,000	$242,000	$26,000

As a consultant, you need to explain to ABC Contracting variance concepts. What does it mean when a variance is described as a favorable variance and as an unfavorable variance?

4. You are a consultant for a start-up company, called Cycle Lovers Corporation, and it does not want to create a budget for the next fiscal year. The chief executive officer (CEO) of Cycle Lovers Corporation remarked to a colleague, "I do not understand why other companies waste so much time in the budgeting process. I set our company goals, and everyone strives to meet them. What is wrong with that approach?" Write a memorandum to the CEO stating whether you agree with this comment or not and explain why. The heading of the memorandum should contain the date, to whom it is written, from whom, and the subject matter