المحاسب الإداري المعتمد الجزء 1 B. Planning, Budgeting and Forecasting

Mistral: Planning a New Product Launch

Mistral Nutrient Systems

Questions: 6 Answered:

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Question of 6 Mistral: Planning a New Product Launch

Mistral: Planning a New Product Launch Case-based question

The case

Mistral Nutrient Systems has completed a limited trial of a packaged nutrient blend for indoor farms. It will begin regular commercial sales in 20X9. The trial leaves 1,500 saleable units in opening finished-goods inventory. Marketing forecasts sales of 16,000 units in 20X9 and 12.5% growth in 20Y0. Management wants year-end finished goods equal to 25% of the following year's forecast sales.

A cross-functional team must turn the launch strategy into coordinated operating and cash plans. Production capacity and raw-material supply are sufficient for the sales and inventory plan, and there is no binding cash constraint. Department managers have detailed knowledge of yields, delivery timing and customer demand.

Assumptions

All units are identical and saleable; there is no spoilage, work in process or change in inventory policy.
Production equals sales plus desired ending finished goods minus beginning finished goods.
Question 4 is an independent sensitivity analysis; it changes only the second-year growth assumption.
The ordering question specifies a dependency chain for the selected operating budgets; other supporting budgets may be prepared concurrently.

Given Mistral's available capacity and financing, why should the operating budget team establish the sales budget before determining production?

Answer The sales budget proves that all forecast customer orders are legally enforceable. Forecast demand, adjusted for the inventory policy, determines how many units production must supply. Production capacity should set the sales target, so the capacity plan must be approved before the sales budget. Production cost must be known first so that selling prices in the sales budget can be set at cost plus a markup.

Select TWO practices most likely to improve the quality and use of Mistral's launch budget.

Select two answers. Selected 0 / 2

Answer Ask knowledgeable department managers to propose assumptions, then challenge and reconcile them across departments. Automatically accept every manager's requested contingency reserve. Hold each department to its original fixed spending total even if actual sales volume exceeds the forecast. Use agreed targets to coordinate resources and investigate meaningful variances during the year. Have finance set all targets top-down and share them with departments after approval to prevent budgetary slack.

How many units should Mistral plan to produce in 20X9 under the base forecast? Enter a positive whole number of units; no rounding is necessary.

Answer units

A whole number.

For this question only, assume forecast sales growth in 20Y0 is 20% instead of 12.5%. What ending finished-goods inventory should Mistral target for December 31, 20X9? Enter a positive whole number of units; no rounding is necessary.

Answer units

A whole number.

To coordinate launch assumptions, Mistral should assign oversight to a Budget coordination body . With no binding supply constraint, the sales plan should be agreed Dependency between sales and production the production plan, and the materials-usage budget should be based on Materials-usage driver .

Order these five budget approvals. The team requires each downstream budget to use the approved quantities or costs from the preceding stage. Assume labor, overhead and selling-cost schedules are separately available when needed.

Dragging, or the arrow buttons, to reorder.

Approve materials-usage and purchases schedules from the production quantities and inventory policies.
Approve the budgeted income statement using the sales and cost-of-goods-sold schedules.
Approve forecast unit sales and selling prices.
Approve cost of goods sold using the completed production-cost and inventory schedules.
Approve production quantities from sales and finished-goods inventory requirements.

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