ABC Company, Inc. is a small manufacturer of commercial fans and have four main products (commercial building exhaust fans, dust hood exhaust fans, portable fans for large spaces, and commercial kitchen exhaust fans). The company has discreet data by product including: units to be produced, unit cost, and tracks costs to the salesperson level. They have historically used a fixed budget format (they do not do a forecast; the budget is the budget). The company has a new competitor and sales have been consistently below budget (although their product is superior), which has caused problems in manufacturing with higher inventory levels. ABC is planning to roll out a new advertising program (something they have not had to do historically). The advertising program is designed to increase sales. ABC Company’s functional organizational structure is represented in the chart below:


Manufacturing Sales Marketing Finance Administration

Production Restaurants

Quality Control Manufacturers

Warehouse and


REQUIREMENTS: If applicable, cite any sources (i.e. your text or other articles we’ve read) in APA format. Please address the following in your write-up:

I. Discuss the components that ABC Company should have in their total budget a. What is needed for each component? Describe what data should be included. b. For manufacturing you can focus on that as a whole (production budget, etc.) c. What role should department managers play in this process and why?

II. What should ABC Company think about in determining advertising costs (how should they track and manage advertising costs)? How could this help manage the sales team?

III. How could moving to a Flexible or Rolling Budget Model vs. a Fixed Budget Model help ABC company? Recommend a model and discuss the considerations (changes to be made) and benefits to ABC.

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