Prepare a short presentation that includes the following (minimum): (1) assumptions you made to
arrive at your numbers, 2) justification for any major changes in expenditures – e.g., adding or
deleting items, capital requests, (3) any problems or concerns you have regarding your budget,
including your reaction to budgeting using two scenarios, (4) explain the changes in activities as
a result of the increase or decrease in the budget.
CREATING A BUDGET
Your first task is to develop a budget for next years operation of your department. Some
relevant information is provided below; also provided is a spreadsheet showing last years
budget.
Develop two budgets for next year. One should be based on an optimistic scenario (companys
revenues grow at or above goals); specifically, the company will grow by 15%, and you need to
plan what changes your department will need to make to support this growth. The second budget
should be based on a pessimistic scenario (companys revenues below goals); specifically,
company revenues will shrink by 15%, and you must plan the changes your department must
make given lower revenues. Use the spreadsheets listed under Budget Exercise -Enter your
budgets onto the spreadsheets; show relevant percentage changes from last year.
———-
Added on 05.10.2016 22:43
CREATING A BUDGET
Your first task is to develop a budget for next years operation of your department. Some
relevant information is provided below; also provided is a spreadsheet showing last years
budget.
Develop two budgets for next year. One should be based on an optimistic scenario (companys
revenues grow at or above goals); specifically, the company will grow by 15%, and you need to
plan what changes your department will need to make to support this growth. The second budget
should be based on a pessimistic scenario (companys revenues below goals); specifically,
company revenues will shrink by 15%, and you must plan the changes your department must
make given lower revenues. Use the spreadsheets listed under Budget Exercise -Enter your
budgets onto the spreadsheets; show relevant percentage changes from last year.
BACKGROUND & SCENERIO
You are the manager of the Management Consulting Department of General Interconglomerate
Corporation. The departments mission is to support functions throughout the corporation by
providing training, recommendations, and advice on management issues. The department
accomplishes this by offering standard training courses to meet special needs of customer groups
and by consulting as needed on special issues. Both the training courses and the consulting
services are offered on-site at the corporations five offices (Seattle, Denver, Toronto, Rio de
Janeiro, and Omaha).
2
Department staff includes six consultants, one administrative assistant, and you – the manager. In
a typical month, each consultant spends about two weeks on the road, traveling to branch offices
to either consult or conduct training (split about 50% consulting – 50% training). When not on
the road, consultants spend about a third of their time conducting training or consulting at
headquarters (split about 75% consulting, 25% training); about half of home-office time is spent
writing reports to document consulting advice, and the rest of the time goes toward new course
or consulting concepts (including research as well as development). The administrative assistant
coordinates communications between customers and consultants, polishing and printing reports
for distribution, printing training materials, distributing training schedules, etc.
Department offices are located in corporate headquarters in Omaha. Equipment currently used by
the department includes eight pcs networked with \\\”works\\\” type software (word processor,
spreadsheet, database, group calendar, e-mail); one of the pcs (assigned to the administrative
assistant) has desktop publishing capability, used to create professional-appearing workbooks for
trainees in the departments training courses. The administrative assistant requested a $500
software upgrade for increased publishing capability. There is one heavy-duty photocopy
machine and a fax. One of your staff members is taking a business class at Bellevue University;
she has informed you that she worked on a project with another student who has a notebook-type
computer, and she thinks that notebooks could allow consultants to be more efficient on their
many trips to branch offices. Notebooks currently cost $1000 per notebook.
CURRENT SITUATION
Department workload has been fairly constant. Lately there has been a steady demand for the
consulting and for the training classes offered by the department. Just about every department in
the company signed up for the five-course TQM sequence last year. You currently have two
consultants working on development of the departments new course, tentatively titled
\\\”Competitiveness for the 90s\\\”, a 3 course follow-on to the popular TQM training; the first
classes in \\\”Competitiveness\\\” will be ready the second month of the fiscal year. Consulting
demand this past year has been largely for TQM implementation support. You expect some
slacking of this as more departments get into a \\\”maintenance mode\\\” on TQM; you wonder if you
should initiate something to assure TQM doesnt fade away. You also wonder whether you
should develop new consulting specialties to supplement your standard repertoire: TQM, conflict
management, organization structure, dealing with downsizing, and creative problem-solving.
You currently measure department quality by surveying (1) all company managers, (2) managers
who have recently used the departments services, and (3) your consultants. Responses have
averaged (on a 5-point scale) 3.8, 4.0, and 3.5 respectively. Quality numbers have been stable.
The one area with an unfavorable trend is a recent users assessment of departments
responsiveness (timely response to service requests): Response averages were 3.9 last year, 3.7
six months ago, and 3.5 last month.
GUIDELINES FROM CORPORATE
The comptrollers department has provided some guidelines for all managers to use in
developing next years budget. The board of directors told the comptroller they want to see
overall revenues increase by 10%. Some of the increased revenue would be directed toward
future growth of the company, some would be returned to stockholders, and some will be shared
with employees. Specifically, profit-center departments (travel) are to plan to achieve 10%
3
revenue growth, or higher, while holding cost increases to 8%; cost-center departments (office
supplies) are to hold their cost increases to less than 5%. Any other capital budget (equipment)
items are to be proposed separately from the operating budget. The $500 software upgrades for
the administrative assistant and notebook purchase have been approved. In a separate instruction,
the human resources department announced that corporate guidelines for next years salary
adjustments call for a 4% cost of living increase on the average. However, this depends upon a
revenue increase or decrease. Bonus plans havent been announced. Previous bonuses have
averaged 4%. HR also indicates that group insurance rates will increase by 7.5%.
Your assignment is to create a narrated PowerPoint Presentation. The PowerPoint
narration instructions can be found in the Assignments/Week 6 tab.
Your presentation should be 3–5 slides (approx. 4-5 minutes in length). Ensure you have a good
introduction, discussion, and conclusion
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