William George is the marketing manager at Crunchy Cookie Company. Each quarter, he is responsible for submitting a sales forecast to be used in the formulation of the company’s master budget.
George consistently understates the sales forecast because, as he puts it, “I am reprimanded if actual sales are less than I’ve projected, and I look like a hero if actual sales exceed my projections.”
a. What would you do if you were the marketing manager at Crunchy Cookie Company? Would you also understate sales projections? Defend your answer.
b. What measures might be taken by the company to discourage the manipulation of sales forecasts?