Step 5 - Prepare memo #1 - Evaluate the Original Assumptions

In the Budget to Publicly Available information-

In this part of the project, you will critically assess the assumptions the controller gave you to develop the master budget. To prepare for this step, you should review the basics of budgeting.

Further, review an overview of the master budgeting process in thefollowing resource provided in the lecture notes.

Review publicly available data related to the assumptions concerning sales volume, sales prices, cost of sales and selling, general and administrative costs for the automobile industry in general and for Ford in particular. You may want to search the Web for automotive industry reports that were relevant at the beginning of the forecast period. Your analysis will be presented as a memo to the Controller.
Step 6 - Prepare Memo #2 - Memo to Management on an Ethical Issue - Milestone 2 -continue with the WORD document in Step 5

To prepare for this step, the controller advises you to review the IMA's Statement of Ethical Professional Practice. Assume in researching the sales forecast for the current year, you determine the master budget the controller asked you to use assumptions are significantly flawed. The likely outcome of correcting these flawed assumptions would be significantly lower profits than shown in the master budget. You know the controller wants to present the forecast of higher earnings to external financial analysts. Prepare a memo to the Controller indicating how you would address this issue.

Step 7- Prepare Memo #3 - Use the EXCEL worksheet to present the comparison of actual to the budget that you created and a WORD document for the narrative discussion.

Obtain the actual 2015 operating income for Ford's Automotive Division.

In your EXCEL file, compare the actual 2015 results to the Master Budget you created. Label the sheet "Comparison of MB to Actual." (sheet #6)

After comparing your Master Budget results to the 2015 actual for Ford's automotive division. discuss in memo #3, why the actual results differ from expected. Be specific about the impact of the economy and competition.

Steps 8, 9 and 10 - Continue with your Word Document- Milestone 4

Step 8 Prepare Memo # 4 Review of the Cash Budget -Milestone 4

Review the 2014Statement of Cash Flow budget. Based on your research, write a report that indicates whether you believe the cash from operations will increase or decrease. In addition, predict the increase or decrease in cash from investing and financing activities. Identify specific accounts that are likely to increase or decrease and explain why you believe there will be differences from the prior year. Provide the basis for your conclusions in a memo to management. Include your references.

Step 9 Prepare Memo #5 - Review of the Balance Sheet - Milestone 4

Review the 2014 balance sheet. Based on your research, include in your report whether or not you believe inventory, accounts receivable, and accounts payable will increase or decrease. Explain why. Predict whether long-term debt will increase or decrease. Also, predict whether Ford will increase, decrease, or maintain current dividends to shareholders as in the past year. Provide the basis for your conclusions. Include your references. Your analysis will be part of your final report.

Step 10 - Prepare Memo # 6 Competitive Analysis and Benchmarking: - Milestone 4

Review the advantages of benchmarking. Ford competes with both domestic and foreign automobile companies. Review the annual reports of Toyota and Honda. Select three (3) key performance measures. At least one performance measure is a financial measure. Assess how Ford automotive performs compared to these two international companies. Consider whether or not Toyota and Honda use international accounting standards to prepare their financial statements. Determine if the data you used is comparable. Write a memo to management that (1) explaining how benchmarking assists management and (2) summarizes your analysis and conclusion. Include your assessment of whether or not the international financial statements you used allowed you to make meaningful comparisons. Identify the limitations.

Step 11 - Prepare Memo #7 An Effective Budget System,

Your final memo to the controller identifying the following items:
A The key characteristics of an effective budget system.
B The steps to prepare a master budget.
C How a flexible budget will assist management in evaluating performance at the end of an accounting period.

Attachment:- Budgeting and Forecasting Case model.xlsx