The Reebok Company manufactures and sells fashion goods. The company has four divisions strategically located near...
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The Reebok Company manufactures and sells fashion goods. The company has four divisions strategically located near all the major markets. Each division operates in the independent responsibility center and is evaluated at the end of the year as an autonomous profit unit. The management of Reebok is not very happy with the performance of one of its division whose cash budget a presented below. The management believes that the division has not achieved the desired growth and profitability mainly because of its slow collection policy. Budgeted statement of Cash Receipts and Cash Disbursements for the XYZ Company for the Year ended 30th June 2019. Particulars Opening Cash Balance Cash Receipts Total Cash Available Cash Disbursement Inventory Asset Purchase Operating Expense Total Disbursements Minimum Cash Balance Required Total Cash Needed Excess of Cash Available over Cash Disbursement Total I Quarter II Quarter ₹) (3) (3) 85,000 60,000 1,45,000 25,000 60,000 15,000 1,00,000 20,000 1,20,000 25,000 20,000 15,000 35,000 5,000 30,000 5,000 40,000 5,000 45,000 15,000 6,000 21,000 6,000 15,000 5,000 26,000 5,000 31,000 -10,000 -10,000 III Quarter IV Quarter (3) (3) 30,000 26,000 56,000 9,000 5,000 2,500 16,500 5,000 21,500 34,500 20,000 13,000 33,000 5,000 10,000 2,500 17,500 5,000 22,500 10,500 After a tremendous amount of research, it has been found that some areas of concern noticed by management are 1) In preparing the budgets, participation from various levels with the organization is missing 2) The relevant people for implementing the budgets are not consulted. These are the people who have the ability to control the item that is budgeted, and who will be rewarded according to its accomplishments. 3) The budget committee has not reviewed the budget to make sure there are no internal inconsistencies. In the context of his information, discuss how the Reebok's company budgeting process could be revised to correct the problems. The Reebok Company manufactures and sells fashion goods. The company has four divisions strategically located near all the major markets. Each division operates in the independent responsibility center and is evaluated at the end of the year as an autonomous profit unit. The management of Reebok is not very happy with the performance of one of its division whose cash budget a presented below. The management believes that the division has not achieved the desired growth and profitability mainly because of its slow collection policy. Budgeted statement of Cash Receipts and Cash Disbursements for the XYZ Company for the Year ended 30th June 2019. Particulars Opening Cash Balance Cash Receipts Total Cash Available Cash Disbursement Inventory Asset Purchase Operating Expense Total Disbursements Minimum Cash Balance Required Total Cash Needed Excess of Cash Available over Cash Disbursement Total I Quarter II Quarter ₹) (3) (3) 85,000 60,000 1,45,000 25,000 60,000 15,000 1,00,000 20,000 1,20,000 25,000 20,000 15,000 35,000 5,000 30,000 5,000 40,000 5,000 45,000 15,000 6,000 21,000 6,000 15,000 5,000 26,000 5,000 31,000 -10,000 -10,000 III Quarter IV Quarter (3) (3) 30,000 26,000 56,000 9,000 5,000 2,500 16,500 5,000 21,500 34,500 20,000 13,000 33,000 5,000 10,000 2,500 17,500 5,000 22,500 10,500 After a tremendous amount of research, it has been found that some areas of concern noticed by management are 1) In preparing the budgets, participation from various levels with the organization is missing 2) The relevant people for implementing the budgets are not consulted. These are the people who have the ability to control the item that is budgeted, and who will be rewarded according to its accomplishments. 3) The budget committee has not reviewed the budget to make sure there are no internal inconsistencies. In the context of his information, discuss how the Reebok's company budgeting process could be revised to correct the problems.
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From the areas of concern mentioned in the document it is clear that the budgeting process at Reebok Company needs revision Heres a discussion on how ... View the full answer
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