Economics and Strategic Research - Report: Whiz Calculator Company

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Kazakhstan Institute of Management

Economics and Strategic Research

under the President of the Republic of Kazakhstan

REPORT

Whiz Calculator Company

Instructor:                        Dr. Simon Tai

Prepared by:                Jaukenova Kunikey          ID # 20020165

                                                Mussagaliyeva Nazgul    ID # 20031495

Almaty, 2004

Report

 “Whiz Calculator Company”

Introduction

        Whiz Calculator manufactured a complete line of electronic calculators, which is sold through branch offices to wholesalers and retailers, as well as directly to government and industrial users. Most of the products carried the Whiz brand name, which was nationally advertised. The company was one of the largest in the industry.

Bernard Riesman was elected president of the Whiz Calculator Company. He had been the vice president of manufacturing for the preceding two years. The new president thought that the existing method of planning and controlling selling costs was unsatisfactory, and he requested the controller to devise a system that would provide better control over these costs.

The selling expenses were budgeted on a “a fixed” or “appropriation” basis. He believed there are two important weaknesses in this method of setting the selling budget.

First, it was impossible for anyone to ascertain with any feeling of certainty the reasonableness of the estimates made by the various department heads.

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Second, selling conditions often changed substantially after the budget was adopted, but there was no provision for making the proper corresponding changes in the selling expense budget. As a means of overcoming these weaknesses the president suggested the possibility of setting selling cost budget standards on a fixed and variable basis.

Analysis and Interpretation of Available Data

       The controller was convinced that the fixed portion of selling expenses-the portion independent of any fluctuation in sales volume-could be established by determining the amount of expenses that had to be incurred at the minimum sales volume at ...

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