While the Sales Manager May Be Ecstatic to Learn He

question 177

Essay

While the sales manager may be ecstatic to learn he has exceeded his sales goal, the production manager may not share that enthusiasm, because having more sales than anticipated requires overtime for workers and additional maintenance on some machinery.Managers use budgeting to control and evaluate their operations.Two types of budgets that are discussed in this chapter are the static budget and the flexible budget.How do the two budgets differ and explain how the flexible budget is used in evaluating performance.

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Definitions:

Mark-up

A surplus included in the goods' purchase price to compensate for overhead costs and gain, determining the final sales price.

Cost

The cost involved in buying an item or the financial outlay needed to produce a good or service.

Mark-up

The amount added to the cost price of goods to cover overhead and profit, expressed as a percentage of the cost.

Markdown

A reduction from the original or listed price of a good or service, often used to stimulate sales or clear out inventory.