Case Study Report on Whiz Calculator CompanyEssay Preview: Case Study Report on Whiz Calculator CompanyReport this essayCase Study Report on Whiz Calculator CompanyIntroductionWhiz Calculator Company is currently considering the new method of planning and controlling selling cost. The old method was unsatisfactory in the new presidents point of view. The old way of planning and controlling the selling expenses was as follows:
Selling expenses were budgeted on a “fixed” or “appropriation” basis. Each October, the accounting department sent to the branch managers and to other managers who were in charge of selling departments a detailed record of the actual expenses of their department for the preceding year and for the current year- to- date.
Guided by this record, by estimates of the succeeding years sales, and by their judgment, these department heads drew up and submitted estimates of the expenses for their departments for the succeeding year.
The estimates made by the branch managers were then sent to the sales manager, who was in charge of all branch sales. He determined whether or not they were reasonable and cleared up any questionable items by correspondence.
Upon the approval by the sales manager, the estimates of branch expenses were submitted to the manager of marketing, who was in charge of all selling, promotional, and warehousing activities.
Then the manager of marketing discussed these numbers with the managers concerned, and after differences were reconciled, the estimates of all selling departments were combined into selling expense budget.
This budget was submitted to the budget committee for final approval.These budgeted figures were divided into 12 equal amounts and compared to each month actual results.In the new presidents point of view there were two limitations of the old method. Firstly, there was no 100 percent confidence in reasonableness of the estimates made by department heads. Secondly, selling conditions changed substantially after the budget was adopted, however under the old method it was impossible to modify the budgeted expenses for these changes. Therefore, the new president introduced a proposal of measuring selling cost on a fixed and variable portion basis.
The Key Questions of the case study.Bernard Riesman, the president of Whiz Calculator Company, was very concerned about the method of measuring and appraisal of selling expenses. He was very sure that the method used was the thing to be changed in the company. Therefore, he introduced a proposal of new method of measurement. Under his proposal all selling expense items should be divided into two portions. One portion is variable to the sales and another is fixed. He thinks that this method would be better in making budgeted selling expense report, because the new method makes it possible to adjust the budgeted report to the increased sales volume. In implementing the new method some points should be clarified:
The Key Questions of the case study.Bernard Riesman, the president of Whiz Calculator Company, very concerned about the method of measuring and appraisal of selling expenses. He was very sure that the method used was the thing to be changed in the company. Therefore, he introduced a proposal of new method of measurement. Under his proposal all selling expense items should be divided into two portions. One portion is variable to the sales and another is fixed. He thinks that this method would be better in making budgeted selling expense report, because the new method makes it possible to adjust the budgeted report to the increased sales volume. In implementing the new method some points should be clarified:
The Key Questions of the case study (and their associated research reports)
The Key Questions of the case study (and their associated research reports)
Mark and Tim Dues, the co-author of the new study
A comparison of the current and previous methods
It is clear that many customers have come and gone since the change to the system. Many of them have been in the market for different kinds of home repairs. When they arrive, the new plan shows very consistent results. Even after they get back in the office, there is almost no change in the customer’s satisfaction, just as when the system first introduced. This shows that home repairs are very useful, especially in the winter, when people have to wait weeks for repairs. And when they return home they never complain about the damage done to their home, such as the leak by the fire.
This will be a long story. There will be many new methods to estimate the sales and market value of any repairs. If you are using your existing system, the system will be better equipped to handle the new one. Moreover, many of the new products are even better than the old ones, using new technology. We will continue to add new products without any compromise if we are able to obtain the final sales rate. As a result, we are confident that this is a product we are working on with our own team, and in our estimation it is at least as good.
One good point is that the new product shows no cost to the customer for replacing one or more units in the system. However, the new product does show cost to the seller for the replacement of the damaged appliance. That is why the seller will not sell the new product and will pay the original price of the appliance.
Summary of research
One important part to read in order to understand why we chose our new system
The primary goal of our research was
What selling expenses are variable to sales, what are partially variable and is there any expenses that are not dependenton sales at all?What proportion of each expense is variable and which is not? How to calculate them?In addition to above key questions for the Whiz Calculator Company, we, as students of strategic management, want to know the strength and limitations of new method. Compare it with the strength and weaknesses of old method. Choose the one that is more appropriate. Also we want to find what company management should do in order to improve the method it will use.
Analysis and Interpretation of Available DataAs it was mentioned before the company management wanted to know what portion of selling expense items are variable to the sales volume, are they variable at all and are they variable on some other factors.
Branch: AManager: N.L. DardenMonth: OctoberBudgetActual(Over)/UnderPercent of SalesNet Sales$ 310,000$261,000$ 49,000Managers Salary$ 2,500$ 2,500$ –0.96%Office Salaries$ 1,450$ 1,432$ 180.55%Sales Force Compensations$ 15,500$ 13,050$ 2,4505.00%Travel Expense$ 3,420$ 3,127$ 2931.20%Stationery, Office supplies$ 1,042$ 890$ 1520.34%Postage$ 230$ 262$ (32)0.10%Light and Heat$ 134$ 87$ 470.03%Subscriptions and Dues$ 150$ 112$ 380.04%Donations$ 125$ –$ 1250.00%Advertising Expense$ 2,900$ 2,700$ 2001.03%Social Security Taxes$ 1,303$ 1,138$ 1650.44%Rental$ 975$ 975$ –0.37%Depreciation$ 762$ 762$ –0.29%Other Branch Expense$ 2,551$ 2,426$ 1250.93%Total$ 33,042$ 29,461$ 3,58111.29%As one can see, Whiz Calculator Company used percentage of sale method for calculating all the discretionary selling expenses. Certainly, this method was very easy to implement.
There were some shortcomings of the method implemented. Firstly, there was no certainty in of the percentage that should be taken in calculating each selling expense. There was no connection between sales and expense item. Another, shortcoming is that it was not possible to adjust adequately the expenses to the increase in sales volume. For example, if the new expectations in sales volume differ form the budgeted amount then the budget should be adjusted for that new expected amount. However, additional sales do not mean that managers salary should