Budgeting: Balance Sheet and Sales Essay

2781 Words Sep 9th, 2012 12 Pages
ACCT556
Budgeting Project
TO THE STUDENT

Fantastic, Inc. is a case study which allows you to incorporate numerous financial and managerial accounting concepts into a single business setting. You will take the position of the company controller who will prepare the budget for the year ended December 31, 2006, using the actual data from 2001 through 2005 and information given to you by various departments. You will prepare a report for the president of the company describing the strengths and weakness of the corporation as well as to provide suggestions for the future. In short, you will be responsible for the planning and control procedures for the company from an accounting standpoint.

In order to focus on important accounting
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The sales department is ready to launch a major advertising campaign which is expected to result in the trend of the last three year to continue for the Stupendous brand even with a small price increase per gallon.

Super Paint has been produced since the company began production. The sales level of this product has been rather stagnant for the last 5 years, and that trend is expected to continue in the future.

The following information regarding the two products has been gathered:

Super Stupendous
Paint Paint

Anticipated 2006 Sales price $10.30 per gallon $15.45 per gallon

Actual 2001 Sales 411,000 gallons None
Actual 2002 Sales 412,000 gallons None
Actual 2003 Sales 405,000 gallons 186,250 gallons
Actual 2004 Sales 430,000 gallons 223,500 gallons
Actual 2005 Sales 420,000 gallons 268,200 gallons

You have made the following conclusions about the two different products:
Super Paint * Sales growth in units will continue to be stagnant. * The more recent years are more representative of continuing unit sales than years in the further past. * Exponential Smoothing will be an appropriate unit sales projection method to use.

Stupendous Paint * Unit sales growth will continue on its current increasing trend * An exponential growth function with the year being the independent variable and the sales volume being the dependent variable will be an appropriate sales projection method.

2006 DIRECT

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