Prepare flexible budget for signet jewelers
Prepare a flexible budget for next year for Signet Jewelers using three different growth rates (assume absorption costing).
Explain how you determined the three growth rates to use (the low, the average, the high).
Explain how you adjusted all other line items in the income statement to reflect the revised sales assumptions.
To support your work, please also indicate:
1. The sales growth rate over 2011-2013 (last three years).
2. Compare growth rate to the overall economy and competitors/industry.
3. How is Signet doing compared to peers?
4. Current interest rates and tax burdens.
Discuss how the flexible budget would impact your view of next year (the implications of the information you computed).
How does a flexible budget differ from a static budget?
Discuss how you can use a flexible budget for planning and control.
Comment on using a flexible budget for performance evaluations.
