Whiz Calculator Case Study
Case Study Report on Whiz Calculator Company
Introduction
Whiz Calculator Company is currently considering the new method of planning and controlling selling cost. The old method was unsatisfactory in the new president 's point of view. The old way of planning and controlling the selling expenses was as follows:
1. Selling expenses were budgeted on a "fixed" or "appropriation" basis. Each October, the accounting department sent to the branch managers and to other managers who were in charge of selling departments a detailed record of the actual expenses of their department for the preceding year and for the current year- to- date.
2. Guided by this record, by estimates of the succeeding year 's sales, and by their judgment, these department heads drew up and submitted estimates of the expenses for their departments for the succeeding year.
3. The estimates made by the branch managers were then sent to the sales manager, who was in charge of all branch sales. He determined whether or not they were reasonable and cleared up any questionable items by correspondence.
4. Upon the approval by the sales manager, the estimates of branch expenses were submitted to the manager of marketing, who was in charge of all selling, promotional, and warehousing activities.
5. Then the manager of marketing discussed these numbers with the managers concerned, and after differences were reconciled, the estimates of all selling departments were combined into selling expense budget.
6. This budget was submitted to the budget committee for final approval.
These budgeted figures were divided into 12 equal amounts and compared to each month actual results.
In the new president 's point of view there were two limitations of the old method. Firstly, there was no 100 percent confidence in reasonableness of the estimates made by department heads. Secondly, selling conditions changed substantially after the budget was adopted, however under the old method it was impossible to modify the
Introduction
Whiz Calculator Company is currently considering the new method of planning and controlling selling cost. The old method was unsatisfactory in the new president 's point of view. The old way of planning and controlling the selling expenses was as follows:
1. Selling expenses were budgeted on a "fixed" or "appropriation" basis. Each October, the accounting department sent to the branch managers and to other managers who were in charge of selling departments a detailed record of the actual expenses of their department for the preceding year and for the current year- to- date.
2. Guided by this record, by estimates of the succeeding year 's sales, and by their judgment, these department heads drew up and submitted estimates of the expenses for their departments for the succeeding year.
3. The estimates made by the branch managers were then sent to the sales manager, who was in charge of all branch sales. He determined whether or not they were reasonable and cleared up any questionable items by correspondence.
4. Upon the approval by the sales manager, the estimates of branch expenses were submitted to the manager of marketing, who was in charge of all selling, promotional, and warehousing activities.
5. Then the manager of marketing discussed these numbers with the managers concerned, and after differences were reconciled, the estimates of all selling departments were combined into selling expense budget.
6. This budget was submitted to the budget committee for final approval.
These budgeted figures were divided into 12 equal amounts and compared to each month actual results.
In the new president 's point of view there were two limitations of the old method. Firstly, there was no 100 percent confidence in reasonableness of the estimates made by department heads. Secondly, selling conditions changed substantially after the budget was adopted, however under the old method it was impossible to modify the