'Lanier Corporation Operates on a Calendar\r'

'Lanier Corporation operates on a calendar-year basis. It begins the annual ciphering process in slow August when the prexy establishes targets for the tally dollar mark gross gross revenue and net income before taxes for the adjoining year.\r\nThe sales target is given kickoff to the marketing department. The marketing film director formulates a sales budget by harvest-tide line in both units and dollars. From this budget, sales quotas by yield line in units and dollars be established for apiece of the plenty’s sales districts. The marketing manager also estimates the cost of the marketing activities to stand up the target sales volume and prepares a tentative marketing write down budget.\r\nThe administrator vice electric chair uses the sales and pull in targets, the sales budget by product line, and the tentative marketing expense budget to forge the dollar amounts that can be devoted to manufacturing and bodily office expense. The decision maker vice president prepares the budget for corporate expenses. She then forwards to the product department the product-line sales budget in units and the arrive dollar amount that can be devoted to manufacturing.\r\nThe product manager meets with the manufactory managers to develop a manufacturing plan that go away produce the required units when needed in spite of appearance the cost constraints set by the executive vice president. The budgeting process usually comes to a halt at this point because the production department does not consider the fiscal resources allocated to be fitted.\r\nWhen this standstill occurs, the vice president to finance, the executive vice president, the marketing manager, and the production manager meet together to determine the final budget for each of the areas.This commonly results in a modest append in the total amount lendable for manufacturing cost and cuts in the marketing expense and corporate office expense budgets. The total sales and net inco me figures proposed by the president are seldom changed. Although the participants are seldom pleased with the compromise, these budgets are final. Each executive then develops a new exact budget for the operations in his or her area.\r\nNone of the areas has achieved its budget in upstart years. Sales often run down the stairs the target. When budgeted sales are not achieved, each area is expected to cut be so that the president’s scratch target can be met. However, the put on target is seldom met because costs are not cut enough. In fact, costs often run above the lord budget in all available areas (marketing, production, and corporate office).\r\nThe president is disturbed that Lanier has not been able to meet the sales and utility targets. He hired a adviser with considerable experience with companies in Lanier’s industry. The consultant reviewed the budgets for the past 4 years. He concluded that the product line sales budgets were reasonable and that th e cost and expense budgets were adequate for the budgeted sales and production levels.\r\n'