{"id":3765,"date":"2022-03-25T05:00:59","date_gmt":"2022-03-25T05:00:59","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/?post_type=chapter&p=3765"},"modified":"2022-03-25T05:00:59","modified_gmt":"2022-03-25T05:00:59","slug":"module-9-assignment-operating-budgets","status":"web-only","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/chapter\/module-9-assignment-operating-budgets\/","title":{"raw":"Module 9 Assignment: Operating Budgets","rendered":"Module 9 Assignment: Operating Budgets"},"content":{"raw":"This assignment is available for download as a\u00a0Word Document.<\/a>\r\n\r\nRead the following scenario and complete the questions and tasks below.\r\n\r\n
\r\n\r\nDon Flowers, CEO of Burbage Manufacturing looked around the conference room as his management team chatted and settled in for the monthly meeting.\r\n\r\n\u201cLet\u2019s get started,\u201d Don said, \u201cwe have a lot to cover today, and frankly it\u2019s not all good news.\u201d\u00a0 The room fell quiet. Don continued, \u201cAs you know we recently experienced a cash shortage despite last quarter\u2019s record sales. We can\u2019t keep going back to the bank to borrow money to support operations. I am counting on each of you to figure out a way to keep this from happening in the future.\u201d\r\n\r\nBrian Mitchell, the newest member of the team raised his hand somewhat sheepishly. \u201cSir, perhaps if we looked at the Master Budget for last month we could begin to identify areas for improvement.\u201d\r\n\r\nDon looked to Alex, his CFO. \u201cWell, Alex that\u2019s your area of expertise and Brian\u2019s suggestion makes sense. Let\u2019s have a look at that Master Budget.\u201d\r\n\r\nAlex looked down at the desk and began shuffling through his paperwork. \u201cWell Don, we don\u2019t exactly have a Master Budget per se. I mean we have budgets for different areas within the company, but I really rely on the managers to know what they need to do in their areas.\u201d\r\n\r\nTerri, the production manager spoke up, \u201cHey, wait a minute Alex. You\u2019re the CFO. I\u2019m doing everything I can just to keep up with demand down there on the floor. I don\u2019t have time to worry about that kind of thing. We had a press go down last week and I had an entire shift of down time. Besides, that\u2019s your job, Alex.\u201d\r\n\r\n\u201cYou know she has a point there Alex. You are the CFO. I need Terri to put all of her time towards keeping the production line running smoothly,\u201d Don said.\r\n\r\n\u201cLook, Don, Alex replied, \u201cIn January I asked everyone to send me their budgets for the year and the only thing I got was a sales budget from Peter with a note attached that asked for a pay increase for his account managers.\u201d\r\n\r\nBrian raised his hand to speak. \u201cWell, I know I\u2019m new here, but at my last company we had budgets for sales, finished goods, cash \u2013 pretty much everything was budgeted. It seemed to work pretty well, and everyone had a good grasp of where we were financially.\u201d\r\n\r\nAlex, the CFO gave Brian an icy stare.\r\n\r\nDon turned to Alex. \u201cAlex, I think this young man has a point. Is there some reason why we aren\u2019t budgeting like he described?\u201d\r\n\r\n\u201cWell\u201d, Alex began, \u201cIt\u2019s really complicated, Don. Marjorie in materials is short two people and she\u2019s paying overtime to her remaining people just to meet supply requisitions from the shop floor. And then there\u2019s the problem with the corporate office. Every time I turn around I am getting an invoice from them for some piece of office equipment or another. Last week I got a bill from some company that Jessica hired to water the plants. How am I supposed to keep track of all of this? And then \u2026.\u201d\r\n\r\nDon raised his hand to cut Alex off. \u201cLook, I know we are a complex organization \u2013 but the fact of the matter is that I can\u2019t keep going to the bank every month, borrowing money to pay the suppliers. For heaven\u2019s sake \u2013 we are a multi-million-dollar company.\u201d\u00a0 By this time Don was red in the face and everyone around the table was showing an intense interest in the conference table. He continued, \u201cWhat am I going to tell the shareholders at the annual meeting when we don\u2019t have enough cash to pay a dividend \u2013 that Jessica spent their money on potted plants?\u201d\r\n\r\n\u201cThis is going to end, today. Brian, you seem like a smart young man. You are going to work with Alex and anyone else in this company to get us on board with establishing and using budgets to correct this situation,\u201d Don explained. \u201cFurther, as for the rest of you -when Brian comes and asks you for information treat him as if it was me making the request. Understood?\u201d\r\n\r\nEveryone nodded their heads in agreement.\r\n\r\n\u201cMeeting adjourned,\u201d Don declared.\r\n\r\n
\r\n\r\n

Questions:<\/h2>\r\n
    \r\n \t
  1. Identify the problems that appear to exist in Burbage\u2019s budgetary control system and explain how these problems are contributing to the company\u2019s poor cash position.<\/li>\r\n \t
  2. Identify the budgets that Brian and Alex will need to create to resolve these issues, including the information that is needed to construct each budget.<\/li>\r\n \t
  3. Once you have identified the problems and necessary budgets, prepare a report for Don and the rest of the management team outlining your plan for establishing a budgetary control system, making certain to include how each component of the system will benefit the overall financial health of the company.<\/li>\r\n<\/ol>","rendered":"

    This assignment is available for download as a\u00a0Word Document.<\/a><\/p>\n

    Read the following scenario and complete the questions and tasks below.<\/p>\n

    \n

    Don Flowers, CEO of Burbage Manufacturing looked around the conference room as his management team chatted and settled in for the monthly meeting.<\/p>\n

    \u201cLet\u2019s get started,\u201d Don said, \u201cwe have a lot to cover today, and frankly it\u2019s not all good news.\u201d\u00a0 The room fell quiet. Don continued, \u201cAs you know we recently experienced a cash shortage despite last quarter\u2019s record sales. We can\u2019t keep going back to the bank to borrow money to support operations. I am counting on each of you to figure out a way to keep this from happening in the future.\u201d<\/p>\n

    Brian Mitchell, the newest member of the team raised his hand somewhat sheepishly. \u201cSir, perhaps if we looked at the Master Budget for last month we could begin to identify areas for improvement.\u201d<\/p>\n

    Don looked to Alex, his CFO. \u201cWell, Alex that\u2019s your area of expertise and Brian\u2019s suggestion makes sense. Let\u2019s have a look at that Master Budget.\u201d<\/p>\n

    Alex looked down at the desk and began shuffling through his paperwork. \u201cWell Don, we don\u2019t exactly have a Master Budget per se. I mean we have budgets for different areas within the company, but I really rely on the managers to know what they need to do in their areas.\u201d<\/p>\n

    Terri, the production manager spoke up, \u201cHey, wait a minute Alex. You\u2019re the CFO. I\u2019m doing everything I can just to keep up with demand down there on the floor. I don\u2019t have time to worry about that kind of thing. We had a press go down last week and I had an entire shift of down time. Besides, that\u2019s your job, Alex.\u201d<\/p>\n

    \u201cYou know she has a point there Alex. You are the CFO. I need Terri to put all of her time towards keeping the production line running smoothly,\u201d Don said.<\/p>\n

    \u201cLook, Don, Alex replied, \u201cIn January I asked everyone to send me their budgets for the year and the only thing I got was a sales budget from Peter with a note attached that asked for a pay increase for his account managers.\u201d<\/p>\n

    Brian raised his hand to speak. \u201cWell, I know I\u2019m new here, but at my last company we had budgets for sales, finished goods, cash \u2013 pretty much everything was budgeted. It seemed to work pretty well, and everyone had a good grasp of where we were financially.\u201d<\/p>\n

    Alex, the CFO gave Brian an icy stare.<\/p>\n

    Don turned to Alex. \u201cAlex, I think this young man has a point. Is there some reason why we aren\u2019t budgeting like he described?\u201d<\/p>\n

    \u201cWell\u201d, Alex began, \u201cIt\u2019s really complicated, Don. Marjorie in materials is short two people and she\u2019s paying overtime to her remaining people just to meet supply requisitions from the shop floor. And then there\u2019s the problem with the corporate office. Every time I turn around I am getting an invoice from them for some piece of office equipment or another. Last week I got a bill from some company that Jessica hired to water the plants. How am I supposed to keep track of all of this? And then \u2026.\u201d<\/p>\n

    Don raised his hand to cut Alex off. \u201cLook, I know we are a complex organization \u2013 but the fact of the matter is that I can\u2019t keep going to the bank every month, borrowing money to pay the suppliers. For heaven\u2019s sake \u2013 we are a multi-million-dollar company.\u201d\u00a0 By this time Don was red in the face and everyone around the table was showing an intense interest in the conference table. He continued, \u201cWhat am I going to tell the shareholders at the annual meeting when we don\u2019t have enough cash to pay a dividend \u2013 that Jessica spent their money on potted plants?\u201d<\/p>\n

    \u201cThis is going to end, today. Brian, you seem like a smart young man. You are going to work with Alex and anyone else in this company to get us on board with establishing and using budgets to correct this situation,\u201d Don explained. \u201cFurther, as for the rest of you -when Brian comes and asks you for information treat him as if it was me making the request. Understood?\u201d<\/p>\n

    Everyone nodded their heads in agreement.<\/p>\n

    \u201cMeeting adjourned,\u201d Don declared.<\/p>\n

    \n

    Questions:<\/h2>\n
      \n
    1. Identify the problems that appear to exist in Burbage\u2019s budgetary control system and explain how these problems are contributing to the company\u2019s poor cash position.<\/li>\n
    2. Identify the budgets that Brian and Alex will need to create to resolve these issues, including the information that is needed to construct each budget.<\/li>\n
    3. Once you have identified the problems and necessary budgets, prepare a report for Don and the rest of the management team outlining your plan for establishing a budgetary control system, making certain to include how each component of the system will benefit the overall financial health of the company.<\/li>\n<\/ol>\n","protected":false},"author":428269,"menu_order":9,"template":"","meta":{"_candela_citation":"[]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-3765","chapter","type-chapter","status-web-only","hentry"],"part":3728,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/3765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/users\/428269"}],"version-history":[{"count":1,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/3765\/revisions"}],"predecessor-version":[{"id":3766,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/3765\/revisions\/3766"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/parts\/3728"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/3765\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/media?parent=3765"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapter-type?post=3765"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/contributor?post=3765"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/license?post=3765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}