2/17/2024 0 Comments Icarus and daedalus story analysisAs you complete this discussion, you may realize you were not always aware of how and why your thoughts corresponded with your actions in the past. Metacognitive activities, such as this discussion and the Metacognitive Forums, can help you reflect on your own learning and develop higher-order thinking. (c) Should the functional areas be expected to cut their costs when sales volume falls below budget? Explain your answer. (b) Suggest how Palmer Corporation's budgeting process could be revised to correct the problems. Instructions Please answer the following (no more than 700 words please): (a) How the budgeting process employed by Palmer Corporation contributes to the failure to achieve the president's sales and profit targets. He concluded that the product line sales budgets were reasonable and that the cost and expense budgets were adequate for the budgeted sales and production levels. The consultant reviewed the budgets for the past 4 years. He hired a consultant with considerable experience with companies in Palmer's industry. The president is disturbed that Palmer has not been able to meet the sales and profit targets. In fact, costs often run above the original budget in all functional areas (marketing, production, and corporate office). However, the profit target is seldom met because costs are not cut enough. When budgeted sales are not achieved, each area is expected to cut costs so that the president's profit target can be met. None of the areas has achieved its budget in recent years. Each executive then develops a new detailed budget for the operations in his or her area. Although the participants are seldom pleased with the compromise, these budgets are final. The total sales and net income figures proposed by the president are seldom changed. This normally results in a modest increase in the total amount available for manufacturing costs and cuts in the marketing expense and corporate office expense budgets. When this standstill occurs, the vice president of finance, the executive vice president, the marketing manager, and the production manager meet together to determine the final budgets for each of the areas. The budgeting process usually comes to a halt at this point because the production department does not consider the financial resources allocated to be adequate. The production manager meets with the factory managers to develop a manufacturing plan that will produce the required units when needed within the cost constraints set by the executive vice president. She then forwards to the production department the product-line sales budget in units and the total dollar amount that can be devoted to manufacturing. The executive vice president prepares the budget for corporate expenses. The executive vice president uses the sales and profit targets, the sales budget by product line, and the tentative marketing expense budget to determine the dollar amounts that can be devoted to manufacturing and corporate office expense. The marketing manager also estimates the cost of the marketing activities required to support the target sales volume and prepares a tentative marketing expense budget. From this budget, sales quotas by product line in units and dollars are established for each of the corporation's sales districts. The marketing manager formulates a sales budget by product line in both units and dollars. The sales target is given first to the marketing department. It begins the annual budgeting process in late August when the president establishes targets for the total dollar sales and net income before taxes for the next year. Palmer Corporation operates on a calendar-year basis.
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