Yates Motors is a family owned and operated car dealership, which means the Yates$$ are directly involved in day$-$to$-$day operations and know many of their customers on a first$-$name basis. They are committed to the promise of something better and that's exactly why they've been satisfying customers for over $50$ years. Yates Motors is about more than selling cars. Management and staff are committed to offering a total customer care experience, from purchase to ongoing maintenance of the customer's vehicle. In addition to the GMC showrooms, the dealership includes an extensive Parts and Service Department, a state$-$of$-$the$-$art Body Shop, and a full$-$service Auto Cleaning and Detailing Centre. As well, financing can be handled on the premises.

MISSION STATEMENT

The Yates Promise:

To be the leading provider of automotive sales and service in Central Ontario

To provide superior customer care through honesty, integrity and respect.

To provide our employees with a safe and positive workplace

To be a responsible business member of our community.

History

The Yates automotive story began in $1958,$ when Mr$.$ George Yates opened his first Auto Repair facility in Barrie. George Yates Jr$.$ and Peter Yates began working with their father while still quite young, and became involved on a full$-$time basis after graduating from university. In $1974,$ George Yates Sr$.$ and his sons began selling GM automobiles. In $1988,$ after their father$$s retirement, the Yates brothers opened up their cleaning and detailing centre. Since that time, several of George Yates$$ grandchildren have also joined the company.

When you come to the dealership you will find a $71,000$ sq ft GMC dealership and service department. The building features spacious showrooms, large, comfortable waiting areas, and customer work centers with internet access. The Yates Motors team is committed to giving back to the community that has supported them for over $50$ years. Long$-$time supporters of countless local charities and community events, the family's efforts have assisted close to $200$ charitable groups in recent years.

Part $1-$ Internal Sources of Funding

Part $2-$ Budget

Part $3-$ The Expansion

PART $2-$ BUDGET

$3-$Year Average Sales per month

Canyon

Sierra

Terrain

Acadia

Savana

Yukon

January

$20$

$18$

$19$

$17$

$12$

$8$

February

$15$

$7$

$9$

$11$

$11$

$11$

March

$13$

$7$

$9$

$10$

$10$

$11$

April

$16$

$6$

$7$

$9$

$7$

$12$

May

$15$

$5$

$6$

$8$

$7$

$12$

June

$12$

$5$

$6$

$7$

$6$

$8$

July

$6$

$5$

$5$

$7$

$7$

$9$

August

$4$

$4$

$8$

$6$

$9$

$8$

September

$3$

$6$

$5$

$5$

$7$

$7$

October

$5$

$5$

$6$

$7$

$6$

$8$

November

$5$

$9$

$10$

$10$

$10$

$9$

December

$19$

$13$

$16$

$13$

$14$

$11$

Yates Motors prepare sales budgets on a product line Basis. To create reliable sales budgets, the dealership uses two main planning assumptions $(4$ marks$)$

Future sales can be reasonably predicted based on the three year average of the types of GMC vehicles that are sold at the dealership.

An prediction of changes in customer activity and economic assessments can be used to determine how sales levels will change over the coming year

Due to the economic recovery and the recent growth in vehicle sales, Yates Motors is expecting a $10\%$ increase in vehicle sales across all models next year.

Pricing and commission rates are expected to be as follows:

Canyon

Sierra

Terrain

Acadia

Savanna

Yukon

Sales Price

$23935$

$26260$

$27465$

$37945$

$38790$

$49290$

Dealer$$s Commission per Vehicle

$2000$

$2150$

$2575$

$3000$

$3125$

$3890$

Salesman Commission per Vehicle

$220$

$236\mathrm{.}50$

$283\mathrm{.}25$

$330$

$343\mathrm{.}75$

$427\mathrm{.}90$

Questions:

Based on the information provided, prepare:

Monthly Product Line sales budget for next year showing total sales $(6$ marks$)$

A monthly budget showing commission earned by the dealership for next year $(6$ marks$)$

A monthly budget showing the commission the dealership needs to pay to its sales people per month next year. $(6$ marks$)$

Expected gross profit per month for the next year $(6$ marks$)$

Is there anything that could be wrong with the planning assumptions used to create the sales budget? Discuss the weaknesses of each assumption and what you would do to improve those weaknesses. $(4$ marks$)$