William George is the marketing manager at Crunchy Cookie Company. Each quarter, he is responsible for...

William George is the marketing manager at Crunchy Cookie Company. Each quarter, he is responsible for submitting a sales forecast to be used in the formulation of the company’s master budget. George consistently understates the sales forecast because, as he puts it, “I am reprimanded if actual sales are less than I’ve projected, and I look like a hero if actual sales exceed my projections.”

b. What measures might be taken by the company to discourage the manipulation of sales forecasts?

Expert Solution

Sales manager in this situation must be involved actively underlying the process of budgeting by assisting in setting of goals that depicts the company’s philosophy. Budget set must represent absolute efficiency and must be achievable and reasonable. Complying with the budgeting philosophy must support company to fall close, exceed or meet the goals set for sales. This must dampen any belief which states that the sales forecast manipulation stands to be mandatory.

The company in addition to this is willing to solicit the estimates pertaining to sales from different sources. Furthermore education stands to be the key. The manipulation will be discouraged to great extent if the sales manager is being educated pertaining to the impact of the estimated made by him upon the controlling and planning. The last but not the least move that must be taken by the company is positive reinforcement. A reward system shall be implemented by the company for accuracy of forecast.

ekkarill92 answered 2 years ago

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