To whom it matters:

Hira Co., Inc., a midsize manufacturer of after-market automotive parts, has had an unexpected amount of turnover in its leadership staff, leaving the owners in need of someone who can help them understand accounting concepts, such as strategic planning, budgeting, and forecasting. You have been hired as a consultant to help the owners understand this information for future planning and to assist them with some immediate budgeting needs and concerns.

The product of your analysis will be a business report on using accounting information for decision making that would be delivered to the owners of a midsize manufacturer.

In Part 1 of your business report, you are to provide an analysis on financial statements, strategic planning, budgeting, and forecasting. In the context of this Assessment, the organization's leaders would use this information to develop their draft budget, which they would then provide to you in

Part 2. In your analysis, address the following:

• Describe the four basic financial statementsincome statement, statement of stockholders' equity, statement of financial position (also known as a balance sheet), and statement of cash flowsand the purpose of each.
• Compare the concepts of strategic planning, budgeting, and forecasting for an organization. Specifically:
  • Describe each concept and the ways they are interrelated, as well as their differences.
  • Analyze the role that each concept plays within an organization. In your analysis, be sure to include how strategic planning, budgeting, and forecasting are used to improve organizational performance.
  • Be sure to include citations and references to support your work.
• Explain what responsibility centers are (in general), as well as the three types of responsibility centers: cost centers, profit centers, and investment centers.
• Identify the decision rights assigned to each type of center, being sure to include examples for each type of responsibility center.

Last Year's Activities Assumptions Hira Co. 1. Revenue is from selling after-market automotive parts. 1. Increase revenue by 10%. Income Statement 2. Salaries are $100,000 and wages are $120,000. 2. Increase salaries by 8% and wages by 2%. 6 For the Year Just Ended 3. Payroll taxes are 10% of salaries and wages. 3. Payroll taxes remain at 10% of salaries and wages. 4. Supplies include raw materials, hardware, tools, etc. 4. Supplies expected to increase by $1,000. 8 Revenues $ 300,000 All items are needed to manufacture car parts. LO 5. Gas, maintenance, etc are for delivery vehicles. 5. Gas, maintenance, etc expected to increase by 5%. 10 Operating Expenses 6. Company cell phone plan costs $450 per month. 6. Current cell phone plan will increase by 3%. 11 Salaries and Wages $ 220,000 7. Insurance is for liability, vehicles, and unemployment. 7. Current insurance provider quoted a 5% increase. 12 Payroll taxes, etc. 22,000 8. Office supplies include tablets and receipt books. 8. Planning to update 10 tablets at $400each. 13 Supplies 16,000 9. Miscellaneous is unknown. 9. Miscellaneous may increase by $2,000. 14 Delivery Fleet 10,000 10. Interest expense is for purchase of the delivery fleet. 10. Interest expense will remain the same. 15 Communications 5,400 11. Provision for income taxes is 22% 11. Provision for income taxes remains at 22%. 16 Insurance 2,400 17 Office supplies 2,000 18 Miscellaneous 6,000 19 283,800 20 Operating Income 16,200 21 Other Income/Expense 22 Interest expense (2,400) 23 Income Before Income Taxes 13,800 24 Provision for Income Taxes (3,036) 25 Net Income S 10,764 26Performance Report For month ending June 20xx Variance Favorable Budget Actual or Unfavorable Production in Number of Assemblies 10,000 12,000 2,000 F Costs: Indirect Labor $26,000 $31,200 5,200 U Supplies $25,000 $29,250 4,250 U Utilities $19,000 $22,500 S 3,500 U Total $70,000 $82,950 S 12,950 U