Whiz Calculator

Company
Group 1
Aditya kiswuryanto
Ahmad Fairuz N
Ahmad Saifudin

Whiz calculator company

Whiz calculator manufactured a complete
line of electronic calculators
It sold trough branch offices to wholesalers
and retailers, as well as directly to
government and industrial users

Whiz calculator company

In august, Riesman elected as president of
whiz
He had been with the company for 5 years
(the last 2 years as vice president of
manufacturing)
Riesman thought that the existing old method
of planning and controlling selling cost was
unsatisfactory
Whiz calculator company considering the new
method of planning and controlling selling cost
was unsatisfactory

Old method budgeting

Incremental budgeting
Selling expenses were budgeted on a fixed or
appropriation basis
The accounting department sent record of actual
expenses for the preceding year and for the current yearto-date
Guided by this record, department heads submitted
estimates of the expenses of their department for the
succeeding year to sales manager.
After sales manager approval, the estimate submitted to
manager of marketing
Then it submitted to the budget comittee for final
approval

Old methods weakness

Riesman believed that there were
important weakness in old method :
impossible to ascertain the reasonableness of the
estimates made by various department heads
Selling condition often change after the budget was
adopted

New method budgeting

Set up a standart of selling expense budget
on a fixed and variable basis.
Set up a minimum sales volume which is 65
% of current factory capacity to determine
fixed portion of selling expense.
Variable portion of the selling expense
standard expressed as a certain amount per
sales dollar.

Question 1

From the information given in Exhibits 1 and

3, determine insofar as you can whether
each item of expense is
(a) variable with sales volume,
(b) partly variable with sales volume,
(c) variable with some other factors, or
(d) not related to output volume at all

Answer:
(a) variable with sales volume,
sales force compensation
(b) partly variable with sales volume,
office salary, travel expense, postage, subcription,
donation, advertising, social security tax, other branch
expense
(c) variable with some other factors,
(d) not related to output volume at all
managers salary, light and heat, rental , depresiation

Question 2
What bearing do your conclusion in question
1 have on the type of budgeting system
that is most appropriate
Answer:
The fixed and flexible budgeting can make
budget planning run effectively

Question 3
Should the proposed sales expense
budgeting system be adopted? Why or why
not?
Answer:
Yes, it should be adopted
Because the new method was flexible. It
can be adjusted when selling condition
change.

Question 4
What other suggestion do you have regarding
the sales expense reporting system for whiz
calculator?
Answer :
Since the flexible cost are based on an amount
per sales $ which it doesnt consider the nature
of each selling teriitory, order size,, or
consumer behavior. The company should learn
to gather more data about market demands for
each region and do some research about
consumer behavior analysis.