Case 7-20 Managerial Accounting

In: Business and Management

Submitted By Gill1991
Words 1298
Pages 6
Table of Contents Executive Summary 2 Introduction 3 Issues 3 Budgeting 3 Analysis 3 Sales 3 Recommendations 4 Market Trends 4 Cutting Cost 4 Appendix 5 Budgeting 5 Actual Sales Numbers 5 Memo 6

Executive Summary
Marlin Company has been in operation for only a few months. As a whole sale distributor that sells products at a cheaper price than stores it as an advantage when coming to bottom line pricing. Currently the company only sells three products which are; sinks, mirrors, and vanities. They are trying to forecast their sales and create a budget of what their expected sales will look like in the coming months.
Marlin Company has already done their budgeting for the next few months. They had a break-even point of $430,000 and expect sales of $500,000. This in the end showed them a net profit of $36,400. Now that they have the actual sales number, the budget that they had predicted is way off. Although they did hit the expected $500,000 in sales number they, however, did not get close to the numbers of sales of each product. They now have higher variable costs and are suffering a loss of 8,600.
One way Marlin Company can a better understanding of to budgeting for the future is to understand market trends. Identifying and understanding trends in the market assists you to forecast future sales and anticipate events and changes that can impact your business. For instance this will allow the company to see why in the following months they sold more mirrors than sinks, Trends in the market can be identified by understanding the pattern of growth or decline in sales. There are many factors that affect trends such as seasonality, population, economy.
For Marlin Company it is important to find out which methods of production are the most or the least cost-effective. Cut down on those that give the least profits, while investing more on…...

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