Integrative Case 16-61

610 Words3 Pages
Integrative Case 16-61- Performance Measurement & Variances a. What were the factors that caused actual quarterly income to be less than budgeted? Quantify the effects of each of these factors. Be as specific as possible. Sadly, this company had a lot of factors working against them when the quarter came to an end. The reason that companies budget is to help ensure that money is being spent properly and to help track where future profits and losses may occur. The unexpected decrease in revenue can be factored into many different areas. One main factor of loss is due to the internet being down for 7 days causing the company to potentially have lost 7.7 percent of it’s customers and an estimated $10,00 in profit for this quarter. Factor number two is the company offering free shipping to orders over $100. Not only did this cause the company to lose the income that it brings in for shipping and add shipping costs to it’s expenses, it also added to marketing by $13,000 plus an additional $32,000 for magazine marketing when ‘Marketing and administration’ it was only budgeted at $90,000. The shift in the economy during this time frame affected the budgeted ‘labor’ expense due to the increase in pay for it’s hourly employees. All of these factors combined worked against the company to cause a negative in operating profit. Although AGM fell short in meeting it’s master budget for this quarter, these unexpected occurrences can help them to better budget for the future of b. For which of these factors, if any, should Mary be held responsible? Mary should be held responsible for the majority of these factors. Although she didn’t ‘plan’ for these things to happen, she is still, in some aspect, responsible for not having a better solution in place for when these things occur. Take for instance the internet going down. This should not have

More about Integrative Case 16-61

Open Document