Competition Bikes Inc. Budget Analysis Summary Report
Budgetary Concerns
There are several budget areas in Competitions Bikes year nine budget forecast that are areas for concern. The factory overhead budget for the year was budgeted at $481,798 less $150,000 depreciation. Total depreciation over the last three years has remained at $130,000 per year for the past three years as identified on the company's balance sheets. Therefore setting depreciation at $150,000 for the 9th year is too high without identifying any new major purchases that would add to this depreciation. Even though depreciation is not actual cash flow it does define the reduction of company assets and should be reported accurately.

The cost of distribution network support needs to be adjusted. A distribution network is everything involved in getting the product from the manufacturer to the retailer. The estimated expense for year nine is $50,830 which is equal to the year eight dollar amount however, year nine forecasted 110 more units sold. The cost per unit of distribution network support is equal to $14.95 when comparing the previous three years data. This meant the forecasted budget for an estimated 3510 units should be set to $52,474.50.

Executive and Administrative salaries have not changed for three years and are budgeted at $220,000 and $170,000 respectively. Not providing any raise for the employees at Competition Bikes could make employees feel unappreciated and devalued. Decrease morale causes performance to suffer, at such a critical time Competition Bikes cannot afford to have inefficient employees that are not at the top of their performance. Salaries for personnel in the Executive and Administrative areas should allot for a raise for year nine.
Utilities are budgeted for $150,000 for year nine. Between years six, seven, and eight, there are no consistencies between the