Body Glow Company
Group B
Memo
To: Russ Lesser, President of Body Glowe
From: Coochi company
Date: October 20, 2008
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 neede ...