Problem:
You will prepare a flexible budget for next year for the company of your choice (A bakery is my choice). The budget needs to be realistic and based on corporate and economic trends.
Set up the flexible budget at three levels for the income statement. Companies prepare budgets based on absorption and/or variable costing. Due to lack of information, we're limiting our budgeting to the absorption approach. You still need to estimate cost behavior based on trends.
Information to consider in determining the three levels.
- What is the growth rate in sales for the past three years?
- What is the current growth rate in the economy?
- How are the competitiors doing?
- Current interest rates and tax burdens.
- Discuss the implications of the information after you have completed the flexible budget.
- What did you learn ; and
- How can you use this information as a manger?
Modular SLP Expectations:
Always include the name or the organization(s), time period covered and source of information. It is important to answer the questions as posed. The discussion should be two to four pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.