Body Glow

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Recommended: Budgeting within an organization

Body Glow Company Group B Memo To: -------, President of Body Glowe From: Coochi company Date: Subject: Determine whether or not the company has the right management procces The purpose The purpose of this memo is to identify if the company has the right management process and if the budgeting process of the Body Glow Company and operates with properly. Also we have to identify the main problems of this budgeting process and give possible suggestions to overcome them. Overview Body Glove describes the forecasting, budgeting, and reporting processes of a small manufacturer operating in a competitive, fashion-conscious, seasonal-business. It will be necessary for you to understand the process and to suggest possible changes for both the short and long term. For what purpose does Body Glove use its budgeting system? Which purposes are emphasized? Body Glove used a bottom up budgeting process because their main goal was to be entirely debt free as soon as possible to increase operating flexibility, not because they needed it for obtaining lines of credit and loans. This type of budget could have the company to evaluate its own performance and motivate its manager to increase sales and efficiency of the company. An important indicator is that the company broke the budget for each department on monthly bases, since they had a variation of products and quality products. The reason why they did this stands to the point that the company produced products in two seasons, fall and spring. The fall products had a cost of $100 dollar per unit because of the more delicate product that required higher material cost, whereas the spring products had a cost of $60 dollars per unit as they needed less costly material. All in, these clarify the fact that they used monthly bases budget. In reasoning the use of a bottom up budgeting is that they didn’t want to base their budget on predictable goals and revenues but they thought it was more efficiently to base it in previous budgets. So base on their ordering cycle, the company was concentrated into three steps: • Pre booking • Building and • Delivering Where they used the pre booking part to show to their customers the products and by doing so, they could set the amount of products and volume they will need to produce in the future. In this case they also could get the cost per production sold to each customer and created a budget. The budgeting process of 1991 was

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