Jet task2
JET Task 2
A1. Budgetary Items Of Concern Within the budget for Competition Bikes, Inc., there are a few different items of concern. Some items that raise a concern within the budget are the projected number of unit sales and the amounts budgeted for advertising and research and development. I think it is obvious in the previous years that the amount the company spends on advertising has a direct effect on the number of sales. According to the projected number of units that are expected to be sold, the company is expecting an increase from 3,400 in year 8 to 3510 in year 9. This is a considerable increase because of the fact that in year 7, there were 4,000 units sold, and in year 8 we saw this drop to 3,400. I think that if the company expects to see an increase in sales, that they must make sure that their advertising budget reflects this. The company has only increased their advertising budget by $984. They really should have increased this budget by a bit more if they were really hoping on increasing their sales. In their most successful year (year 7), Competition spent $32,760 on advertising. This dropped to $27,428 the next year. If we only increase the budget by $984, you can only expect minimal increases of sales as a result.
A2. Evaluation Of Flexible Budget and Variances A flexible budget is a budget that adjusts different variable costs based on the volume of activity. This budget is better than a static budget, because you can adjust it due to the actual needs of the company. For example, if we experience a month that has more orders than expected, we can increase the budget allowance for certain variable costs. On the opposite side of the spectrum, if we experience a downturn, we can cut the budget to avoid overspending on a slow month. Because there is really no way to accurately predict the exact sales and costs within a year, there are bound to be variances, both favorable and unfavorable. Some of these variances are also included
A1. Budgetary Items Of Concern Within the budget for Competition Bikes, Inc., there are a few different items of concern. Some items that raise a concern within the budget are the projected number of unit sales and the amounts budgeted for advertising and research and development. I think it is obvious in the previous years that the amount the company spends on advertising has a direct effect on the number of sales. According to the projected number of units that are expected to be sold, the company is expecting an increase from 3,400 in year 8 to 3510 in year 9. This is a considerable increase because of the fact that in year 7, there were 4,000 units sold, and in year 8 we saw this drop to 3,400. I think that if the company expects to see an increase in sales, that they must make sure that their advertising budget reflects this. The company has only increased their advertising budget by $984. They really should have increased this budget by a bit more if they were really hoping on increasing their sales. In their most successful year (year 7), Competition spent $32,760 on advertising. This dropped to $27,428 the next year. If we only increase the budget by $984, you can only expect minimal increases of sales as a result.
A2. Evaluation Of Flexible Budget and Variances A flexible budget is a budget that adjusts different variable costs based on the volume of activity. This budget is better than a static budget, because you can adjust it due to the actual needs of the company. For example, if we experience a month that has more orders than expected, we can increase the budget allowance for certain variable costs. On the opposite side of the spectrum, if we experience a downturn, we can cut the budget to avoid overspending on a slow month. Because there is really no way to accurately predict the exact sales and costs within a year, there are bound to be variances, both favorable and unfavorable. Some of these variances are also included