The controller of Northwest Hardware has just received two forecasts for sales in the Montana District for

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The controller of Northwest Hardware has just received two forecasts for sales in the Montana District for the coming year. Based on an econometric analysis of consumer spending and economic trends, a marketing research firm estimates sales of $1 million for next year. Lloyd Sutter, the district sales manager, estimates sales of $900,000. The controller seeks your advice on the estimate that should be used in developing next year’s budget.

Required

a. What are two possible explanations for the difference between the marketing firm’s estimate and Lloyd’s?

b. Suppose that instead of $900,000, Lloyd estimates $1.1 million in sales. What are two possible explanations for the difference between the marketing firm’s estimate and Lloyd’s?

c. Do any of these explanations suggest unethical behavior by Lloyd?

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a One explanation is that Lloyd has better more specific local knowledge about conditions in the Mon...View the full answer

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Fundamentals of Cost Accounting

ISBN: 978-0077398194

3rd Edition

Authors: William Lanen, Shannon Anderson, Michael Maher

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Question Posted: Apr 26, 2012 04:08 AM

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The controller of Northwest Hardware has just received two forecasts for sales in the Montana District for

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a One explanation is that Lloyd has better more specific local knowledge about conditions in the Mon...View the full answer

Fundamentals of Cost Accounting

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