Purchase Solution

Flexible Budget for DirectTV for Three Levels of Activity

Not what you're looking for?

Ask Custom Question

Requirement:

DIRECTV COMPANY WILL BE USED.

Budgeting is an important internal activity. Preparing budgets involve forecasting sales and estimating costs. For this SLP, you will prepare a flexible budget for next year for the company of your choice. The budget needs to be realistic and based on corporate and economic trends.

Companies prepare budgets based on absorption and/or variable costing. Due to lack of information, we're limiting our budgeting to the absorption approach. Don't forget that the presentation of the information is important.

Set up the flexible budget at three levels - minimum, average and high revenues. Use the financial statements and do research on the company of your choice to determine growth trends. Explain your estimates and prepare a flexible budget showing the low, the average, and the high revenues and adjust all other line items in the income statement to reflect the revised revenue assumptions.

What is the growth rate in sales for the past three years?
Are revenues and expenses growing at the same rate? What was the experience in the past few years?
What is the current growth rate in the economy?
How are the competitiors doing?
Current interest rates and tax burdens.
Discuss the implications of the information after you have completed the flexible budget.
What did you learn ; and
How can you use this information as a manger?

Purchase this Solution
Solution Summary

Your tutorial is 354 words plus a flexible budget showing the contribution margin and operating profits for 2011 and three levels of forecast for 2012. Assumption are noted. The 2011 financial statements and data used to support the analysis are provided.

Solution Preview

What is the growth rate in sales for the past three years?

Revenues are up 26% from 2009 to 2011, with more of the increase occuring between 2009 a dn 2010 than from 2010 to 2011. US subscribers are up 3.6% frm 2010 to 2011 and Latin American subscribers are up 26.6% from 2010 to 2011.

Are revenues and expenses growing at the same rate? What was the experience in the past few years?

Expenses are growing more slowly than revenues. Expenses are up 19.6% while revenues are up 26% over the 2009 - 2011 span.
What is the current growth rate in the economy?

The economy is ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

View More Free Quizzes
Related BrainMass Solutions

  • McDonald's 2012, Flexible budget Planning Performance eval

    A flexible budget shows how sales, costs and profits shift as activity shifts. In this case, it shows three potential scenarios based on three levels of activity. A static budget is just the forecast for one level of activity.

  • Absorption Costing: Flexible Budget for Signet Jewelers

    A flexible budget shows how sales, costs and profits shift as activity shifts. In this case, it shows three potential scenarios based on three levels of activity. A static budget is just the forecast for one level of activity.

  • Flexible Budgets

    Static budgets are the beginning of the year budgets and are created based on expected activity levels. The flexible budget is the static budget "updated" for the actual activity level that occurred during the period.

  • Panera Bread Company: Flexible budget Three levels

    PANERA BREAD COMPANY I have created a flexible budget for PANERA BREAD COMPANY (attached in Excel) which shows three levels of flexible budget.

  • flexible budget at three levels

    468393 flexible budget at three levels Can you give me an example of a flexible budget at three levels for the income statement?

  • Differences in flexible and static budget

    For small organization we can adapt static budget because of above disadvantages of flexible budget. Flexible budget is more complicated and costly for small organization. 2.

  • Hannon Company: Prepare a flexible manufacturing budget

    I have shown the three levels of activity requested.

  • Flex vs Fixed

    By using the Cost-Volume Formula (or Flexible Budget Formula), a series of budgets can be developed easily for various levels of activity.

  • A flexible budget for next year at Amazon.com

    Discuss the implications of the information after you have completed the flexible budget. The flexible budget show a WIDE range of outcome, from a loss to just above breakeven to a large profit. Activity matters! Why?

View More Related Solutions