You have just been hired at ABC Manufacturing, and your supervisor has invited you to sit in on today's budget meeting. You are given a copy of the following proposed budget for next year to review. The budget is being used by ABC to plan for next year. Your supervisor tells you right before the meeting, "We always overestimate because the president always makes us cut the budget by 20%, and besides, I really want to go to that conference in Las Vegas next year." He continued," I have really worked hard this year and put in a lot of overtime so I deserve it."

1. Discuss if you think ABC Manufacturing is properly using the budget process to plan for next year's expenses.

2. Discuss the comment about the president cutting the budget each year in terms of proper leadership and control?

3. Discuss the ethical issues related to inflating the budget.

Year	20XX - Budget	% Increase over last year
REVENUE: SALE		700,000	15%
COST OF GOODS SOLD		420,000	20%
GROSS PROFIT		280,000
EXPENSES:
Advertising	9,500		20%
Cleaning	1,800		20%
Insurance	28,000		20%
Phone	3,600		20%
Rent	24,000		20%
Supplies	6,500		20%
Taxes	10,000		20%
Training/Education	9,800		20%
Utilities	8,500		100%
Wages	150,000		35%
Total Expenses		251,700
NET INCOME		28,300