Flashbulb Memory Definition and Examples

Do you remember exactly where you were when you learned about the terrorist attacks of September 11, 2001? Can you recall with great detail what you were doing when you discovered there had been a terrible shooting at a high school in Parkland, Florida? These are called flashbulb memories—vivid memories of a significant, emotionally arousing event. Yet while these memories seem especially accurate to us, research has demonstrated that isn’t always the case. Key Takeaways: Flashbulb Memories Flashbulb memories are vivid, detailed memories of surprising, consequential, and emotionally arousing events like the terrorist attacks of September 11, 2001.The term â€Å"flashbulb memory† was introduced in 1977 by Roger Brown and James Kulik, but the phenomenon was known to scholars well before then.While flashbulb memories were initially believed to be accurate recollections of events, research has demonstrated that they decay over time just like regular memories. Instead, it’s our perception of such memories and our confidence in their accuracy that makes them different from other memories. Origins Well before the term â€Å"flashbulb memory† was introduced, scholars were aware of the phenomenon. As early as 1899, F.W. Colgrove, a psychologist, conducted a study in which participants were asked to describe their memories of discovering President Lincoln had been assassinated 33 years earlier. Colgrove found people’s recollections of where they were and what they were doing when they heard the news were especially vivid. It wasn’t until 1977 that Roger Brown and James Kulik introduced the term â€Å"flashbulb memories† to describe such vivid remembrances of surprising and significant events. The researchers found that people could clearly recall the context in which they heard about major events like President Kennedy’s assassination. The memories usually included where the individual was, what they were doing, who told them, and how they felt, in addition to one or more insignificant details. Brown and Kulik referred to these memories as â€Å"flashbulb† memories because they seemed to be preserved in peoples minds like a photograph at the moment a flashbulb goes off. However, the researchers also noted the memories werent always perfectly preserved. Some details were often forgotten, such what they were wearing or the hairdo of the individual who told them the news. On the whole, though, people were able to recall flashbulb memories even years later with a clarity that was lacking from other kinds of memories. Brown and Kulik accepted the accuracy of flashbulb memories and suggested that people must have a neural mechanism that enables them to remember flashbulb memories better than other memories. Yet, the researchers only asked participants to share their memories of the Kennedy assassination and other traumatic, newsworthy events at one point in time. As a result, they had no way to assess the accuracy of the memories reported by their participants. Accuracy and Consistency Cognitive psychologist Ulric Neisser’s own inaccurate recollections of where he was when he learned about the attack on Pearl Harbor on December 7, 1941 led him to research the accuracy of flashbulb memories. In 1986, he and Nicole Harsch began research for a longitudinal study in which they asked undergraduate students to share how they’d learned about the explosion of the Challenger Space Shuttle. Three years later, they asked the participants to share their recollections of that day again. While the participants’ memories were just as vivid at both times, over 40% of participants’ memories were inconsistent between the two time periods. In fact, 25% related completely different memories. This research indicated that flashbulb memories may not be as accurate as many believed. Jennifer Talarico and David Rubin took the opportunity presented by September 11, 2001 to test this idea further. The day after the attacks, they asked 54 students at Duke University to report their memory of learning about what happened. The researchers considered these recollections flashbulb memories. They also asked the students to report an everyday memory from the previous weekend. Then, they asked participants the same questions one week, 6 weeks, or 32 weeks later. The researchers found that over time both the flashbulb and everyday memories declined at the same rate. The difference between the two kinds of memories rested in the difference in participants’ belief in their accuracy. While ratings for the vividness and belief in the accuracy of everyday memories declined over time, this wasn’t the case for flashbulb memories. This led Talarico and Rubin to conclude that flashbulb memories aren’t more accurate than normal memories. Instead, what makes flashbulb memories different from other memories, is people’s confidence in their accuracy. Being There Versus Learning About an Event In another study that took advantage of the trauma of the 9/11 attacks, Tali Sharot, Elizabeth Martorella, Mauricio Delgado, and Elizabeth Phelps explored the neural activity that accompanied the recollection of flashbulb memories versus everyday memories. Three years after the attacks, the researchers asked participants to recall their memories of the day of the attacks and their memories of an everyday event from around the same time. While all of the participants were in New York during 9/11, some were close to the World Trade Center and witnessed the devastation first hand, while others were a few miles away. The researchers found that the two groups descriptions of their memories of 9/11 varied. The group closer to the World Trade Center shared longer and more detailed descriptions of their experiences. They were also more confident about the accuracy of their memories. Meanwhile the group that was further away supplied recollections that were similar to those of their everyday memories. The researchers scanned the participants’ brains as they recalled these events and found that when participants who were close by recalled the attacks, it activated their amygdala, a part of the brain that deals with emotional response. This wasn’t the case for participants who were further away or for any of the everyday memories. While the study didnt account for the accuracy of the participants’ memories, the findings demonstrated that first-hand personal experience may be necessary to engage the neural mechanisms that result in flashbulb memories. In other words, flashbulb memories could be the result of being there rather than hearing about an event later. Sources Anderson, John R. Cognitive Psychology and Its Implications. 7th ed., Worth Publishers, 2010.Brown, Roger, and James Kulik. â€Å"Flashbulb Memories.† Cognition, vol. 5, no. 1, 1977, pp. 73-99. http://dx.doi.org/10.1016/0010-0277(77)90018-XNeisser, Ulric, and Nicole Harsch. â€Å"Phantom Flashbulbs: False Recollections of Hearing the News About Challenger.† Emory Symposia in Cognition, 4. Affect and Accuracy in Recall: Studies of â€Å"Flashbulb† Memories, edited by Eugene Winograd and Ulric Neisser, Cambridge University Press, 1992, pp. 9-31. http://dx.doi.org/10.1017/CBO9780511664069.003Sharot, Tali, Elizabeth A. Martorella, Mauricio R. Delgado, and Elizabeth A. Phelps. â€Å"How Personal Experience Modulates the Neural Circuitry of Memories of September 11.† PNAS: Proceedings of the National Academy of Science of the Unites States of America, vol. 104, no. 1, 2007, pp. 389-394. https://doi.org/10.1073/pnas.0609230103Talarico, Jennifer M., and David C. R ubin. â€Å"Confidence, Not Consistency, Characterizes Flashbulb Memories.† Psychological Science, vol. 14, no. 5, 2003, pp. 455-461. https://doi.org/10.1111/1467-9280.02453Talarico, Jennifer. â€Å"Flashbulb Memories of Dramatic Events Aren’t As Accurate As Believed.† The Conversation, 9 September, 2016. https://theconversation.com/flashbulb-memories-of-dramatic-events-arent-as-accurate-as-believed-64838

The International Monetary Fund ( Imf ) - 6431 Words

Introduction In the statement of the 2015 Article IV Consultation Mission to China, the International Monetary Fund (IMF) concluded that the Chinese economy was transitioning to a safer and higher-quality growth. In particular, the IMF highlighted that China had made good progress in recent years in reducing its large current account surpluses and its huge accumulation of foreign exchange reserves. Although undervaluation of the yuan was a major factor causing the large imbalances in the past, the appreciation of the yuan over the past few years had brought the yuan-USD exchange rate to a level that was no longer undervalued. Exchange rate, the price of a nation’s currency in terms of another currency, indicates the value of a currency: a higher exchange rate is associated with a relatively lower value of its corresponding currency. Since Chinese goods are usually valued in yuan, the only currency that is valuable for Chinese is yuan. That is, a Chinese is only interested in selling and purchasing goods in yuan. Foreign consumers, such as Americans, have to use yuan rather than dollars to purchase goods from Chinese sellers. Specifically, an American must exchange his dollars into yuan at first and then uses yuan to purchase Chinese goods. In other words, the yuan-USD exchange rate works as a tool to measure the price of the dollar in yuan. Facing the threat of trade sanctions by the U.S. Congress, China announced that it would replace its decade-old currency peg with aShow MoreRelatedInternational Monetary Fund ( Imf )2266 Words   |  10 PagesAims/Purpose International Monetary Fund (IMF) aims to maintain and defeat and sometimes to restrain the financial crises. (BBC, 2012) Basically it was created to avoid another Great Depression with an economical cooperation. It was founded more than 60 years ago at the end of the II World War. 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Originally, the IMF was designedRead MoreThe International Monetary Fund ( Imf )1501 Words   |  7 PagesTHE INTERNATIONAL MONETARY FUND (IMF) The IMF was set up during the Second World War in the year 1944. It started operation in 1947 and it has been working with the UNO since. Its headquarters is in Washington D.C in America. IMF provides short term loans to countries having problems of balance of payments. It also provides technical advice to its members and ensures free flow of trade by removing all trade restrictions. It establishes and maintains stable exchange rate between member countriesRead More The International Monetary Fund (IMF) Essay1888 Words   |  8 PagesThe International Monetary Fund (IMF) International Monetary Fund (IMF), international economic organization whose purpose is to promote international monetary cooperation to facilitate the expansion of international trade. The IMF operates as a United Nations specialized agency and is a permanent forum for consideration of issues of international payments, in which member nations are encouraged to maintain an orderly pattern of exchange rates and to avoid restrictive exchange practices.Read MoreEssay on The International Monetary Fund (IMF)2392 Words   |  10 Pages The International Monetary Fund, is an international organization established in 1945 as part of the United Nation system. Its creation was conceived at Bretton woods, to â€Å"†¦regulate the rates at which currencies were exchanged among member countries; and it would help ensure international stability by making loans at times of crisis in member countries’ balance of payments.† Since its creation, the IMF have gain enormous power in the international community, specially influencing the

Global Marketing efforts of Toyota Motors Free Essays

INTRODUCTION Global marketing is the act of marketing products or services across national, political or cultural boundaries in a bid to maximize sales, diversify, achieve economies of scale, and explore new territories (Keller, 2003). Marketing on a global scale has been born primarily due to globalization and international expansion. Multinational companies need to expand beyond their home markets, and this involves investing in new territories, often with differing cultures and socio-cultural norms. We will write a custom essay sample on Global Marketing efforts of Toyota Motors or any similar topic only for you Order Now Hofstede (2011) notes that the most significant hurdle in global marketing has been over the past decade with an increasing number of multinational corporations seeking to gain substantial market share in China, and other developing countries (such as Brazil, India and Russia), as these countries have relatively low market penetration, high demand, but very different cultures to western countries. According to Schneider and Barsoux (1997), cultures around the world are increasingly converging, and these have resulted in the ability of multinationals to leverage their international reputation and successfully sell one product across multiple regions. Murphy and Lacziniak (2006) have also stated that the influence of technology, economic, socio-cultural and political forces makes it easier to create a marketing strategy with a mix suitable for a variety of regions and catering for different cultures. However, in as much as converging cultures may have unified demand, this does not necessarily translate to similar consumer perception or expectations across all markets. Culture affects consumer behavior by influencing consumption decisions, hence creating desires and driving the consumer to select products or brands that fulfill specific needs. As a result, organizations need to understand how cultural norms may affect their marketing strategies within respective regions in order to create a marketing strategy that can successfully penetrate new market environments (Usunier et al, 2005). This paper focuses on the global marketing efforts of Toyota Motors, and how various cultural dimensions may have an affect on its marketing activities in international markets. Cultural Analysis Toyota is the third largest automobile manufacturing company in the world, employs over 300,000 staff, and operates globally (Whoriskey, 2012). Its extensive global operations make the company an ideal case study for cultural analysis. Scholars have conducted extensive research on cultural dimensions across different regions, and the most notable of these are of Hofstede (2011), who developed a model hierarchy of the world based on an analysis of IBM managers in several countries. His model identified four main components that define cultural dimensions and these are: power distance, uncertainty avoidance, masculinity / femininity, and individualism / collectivism. According to Hofstede (2011), several regions differ in their cultural dimensions, and these could have a significant impact on the marketing activities of international firms such as Toyota operating extensively within different cultural regions. Power Distance High power distance cultures are usually characterized by authoritarian societies and work environments, in which subordinates are highly dependent on their bosses in decision-making and welfare. Such societies are highly authoritative and are usually characterized by high amounts of income and gender inequality (Mooji and Hofstede, 2010). Hofstede (2011) found power distance to be high in Latin American and Arab countries, and much lower in Europe and the US. According to Hocklin (1998), high power distance cultures are usually characterized by chauffeur driven cars, while Dash et al (2009) found that countries with low power distance usually expect highly responsive and quality service; while those high on power distance attach a greater importance to tangible service attributes. These attributes relevant to the automobile industry could be prestige, reliability, exclusivity, luxury, type and cost. Therefore an emphasis of branding, in such a way that it communicates to the buyer that it would improve their prestige, reputation, and it is exclusive, would be effective in high power distance cultures. However, in low power distance cultures, an emphasis on service delivery such as roadside assistance, extended warranties, reliability and servicing could be equally effective. Power distance is also prevalent in youth consumption. In the US, a low power distance economy, about 49% of 17-year olds had driver’s licenses in 2008 (Neff, 2010). This translates to the fact that more young people are able to buy cars. However, when compared to a high power distance country like China, much less numbers of youth are able to afford automobiles, due to the high-income disparity between the rich youths and the rest of the population (Lee, 2010). Individualism / Collectivism As the title suggest, collectivism suggests a collectivist society in which a greater emphasis is placed on family values, community and team in the work place (Mooij and Hofstede, 2010), as opposed to individualism whereby it is mostly about an individual’s accomplishment and self-actualization. Dash et al (2009) found that consumers high on individualism expect lower empathy and assurance, while Murphy and Lacziniak (2006) noted that consumers high on individualism are more focused on personal preferences than family or team preferences. Regarding Toyota’s products, cultures with high individualism may see higher sales in two door sports cars and luxury vehicles, as opposed to collectivist cultures where sedans and family cars could sell higher. Furthermore, with respect to advertising and marketing, Mooij and Hofstede (2010 advocate denoting a brand in a more collective light within collectivist cultures. So for a car manufacturer like Toyota, branding efforts could center on family road trips or team based activities; or a happy couple driving their brand new jeep with a baby in the back. However, for an individualistic culture, it may focus more on a sense of self-achievement or fulfillment. Uncertainty Avoidance This refers to the extent to which people feel threatened by unknown situations (Hoecklin 1998). Cultures that are strong in uncertainty avoidance are aggressive, active, compulsive and intolerant while those weak in uncertainty avoidance are less aggressive; more relaxed, contemplative and relatively tolerant (Hoecklin 1998). Markets with high uncertainty avoidance are also characterized by much lower consumer credit (Mooij and Hofstede, 2010), as consumers usually desist from financial items such as consumer loans, credit cards, mortgages or car loans. This may likely lead to a lower amount of cars being sold. Mooij and Hofstede (2010) also notes that innovativeness and a wish for change are low in high uncertainty regions, so the emphasis would center on more of the same. The same trusted brands, driving standards, and an emphasis on Toyota’s core values could be marketed. While marketing to cultures with high uncertainty avoidance, Toyota could also emphasize on the safety of its motor vehicles, the value of its brand, and its reputation; as these would most likely promote the sense of a predictability and safety. Masculinity / Feminity According to Mooij and Hofstede (2010, â€Å"an important value of masculine cultures is achievement, and when combined with individualism, success can be shown†. Hofstede (2011) labeled those cultures that strive to differentiate the roles of men and women as masculine cultures while those that permitted more overlapping social roles for the sexes as feminine cultures. Japan ranks high among the more masculine countries while Netherlands ranks lows The UK and US, on the other hand, rank in the middle of this dimension though slightly more towards masculine cultures (Assael 1998). Toyota promotes its luxury brands (Lexus) as a status symbol, while some of its other brands are off-road, strong, high capacity vehicles. With these, they have gained substantial market share in the US. Societies placing high value on feminism are less assertive, and focus more on quality of life, interpersonal relationships and a concern for the weak (Aaker Alexander 1993). These societies tend to be less extravagant in consumption and their purchase decisions, are more modest, and seek low-end products. Toyota Cultural Marketing Based on the cultural dimensions analyzed, Power Distance seems to have the most significant impact on marketing, especially in high power distance cultures. This chapter would give recommendations on how Toyota could adjust its marketing mix to account for a culture with high power distance[1]. Firstly, Toyota should focus on differentiating the market into the upper 20% and the masses. The upper 20% would be targeted for their affinity for luxury goods, and their spending power. They would be capable of purchasing luxury cars and jeeps, which would appeal to their status within the society. An emphasis should be placed on marketing service attributes such as prestige in owning the vehicle, it’s luxury, reliability and it’s status-enhancing power. Individuals should want to own new Toyota’s because it makes them feel better than their peers, and like they have achieved something. In such a high power distance culture, it is likely that the youth population and the lesser earning individuals may not be able to afford luxury vehicles. However, the vehicles sold to them, no matter how cheap or small, should be packaged in such a way that it enhances their social standing, and offers a sense of achievement even in the smallest sense. Conclusion The analysis within this report has shown that cultural attributes within a region do have an impact on global marketing. Dimensions such as power distance, uncertainty avoidance and individualism affect consumer behavior due to its impact on culture. As a result, different marketing messages and tactics are likely to appeal to different audiences based on their cultural values. It is therefore in the best interest of multinational companies to ensure they understand their target markets, and develop appropriate methods of marketing their products in the most appealing way. REFERENCES Aaker D and Alexander, L.B. (1993) Brand Equity Advertising’ Advertising’s role in building strong brands, Lawrence Erlbaum Associates, London. Aaker, A. D. (1991) Managing Brand Equity, Capitalizing on the Value of a Brand Name, The Free Press, New York. Assael, H., (1998) Consumer Behaviour and Marketing Action. 6th edition, International Thomson Publishing. Dash, S., Bruning, E., and Acharya, M. (2009) The effect of power distance and individualism on service quality expectations in banking: A two-country individual- and national-cultural comparison†, International Journal of Bank Marketing, Vol. 27 (5), pp.336 – 358 Harner, S. (2011) Japan’s Automakers Face New Challenges (1): Toyota in China, www.forbes.com, [accessed: 12/03/2012] Hoecklin, L., 1998. Managing Cultural Differences, Addison Wesley, ISBN 0-201-42770-2 Hofstede, G., 2011. â€Å"Geert Hofstede Cultural Dimensions†, {Viewed on 15th March 2012} from http://www.geerthofstede.com/ Keller, K.L., 2003. Strategic Brand Management: Building, Measuring and Managing Brand Equity, 2nd Ed, Prentice hall, New Jersey. Lee, K. (2010) Debunking Myths About China’s Youth Culture, www.forbes.com, [accessed: 12/03/2012] Mooij, M, and Hofstede, G. (2010) The Hofstede model – Applications to global branding and advertising strategy and research, International Journal of Advertising, Vol. 29(1), pp85 – 110 Murphy,P.E. G. R. Lacziniak, 2006. Marketing Ethics, Pearson Prentice Hall Neff, J. (2010) Is digital revolution driving decline in US car culture, www.adage.com, accessed: 12/03/2012 Schneider, S. C, J.L Barsoux, 1997. Managing across cultures, 2nd Edn, Prentice Hall Usunier, Jean-Claude J. Lee, 2005. Marketing Across Cultures, 5th Edn, FT Prentice Hall, ISBN: 0273685295 Whoriskey, P, (2012) GM once again leads the world in auto sales, www.washingtonpost.com, accessed: 12/03/2012 Zhang, Y., Winterich, K. P., and Mittal, V. (2010) Power Distance Belief and Impulsive Buying, Journal of Marketing Research, Vol. 47 (5) References Aaker, A. D., 1991. Managing Brand Equity, Capitalizing on the Value of a Brand Name, The Free Press, New York. Aaker D L.B. Alexander, 1993. Brand Equity Advertising’ Advertising’s role in building strong brands. Lawrence Erlbaum Associates, London. Assael, H., 1998. Consumer Behaviour and Marketing Action. 6th edition, International Thomson Publishing. Hoecklin, L., 1998. Managing Cultural Differences, Addison Wesley, ISBN 0-201-42770-2 Howard, J.A., J.N. Sheth, 1969. â€Å"The theory of buyer behavior†. Hofstede, G., 2011. â€Å"Geert Hofstede Cultural Dimensions†, {Viewed on 15th March 2012} from http://www.geerthofstede.com/ Keller, K.L., 2003. Strategic Brand Management: Building, Measuring and Managing Brand Equity, 2nd Ed, Prentice hall, New Jersey. Murphy,P.E. G. R. Lacziniak, 2006. Marketing Ethics, Pearson Prentice Hall Schneider, S. C, J.L Barsoux, 1997. Managing across cultures, 2nd Edn, Prentice Hall Usunier, Jean-Claude J. Lee, 2005. Marketing Across Cultures, 5th Edn, FT Prentice Hall, ISBN: 0273685295 [1] Toyota is in virtually all developed, developing and under developed market so it was near impossible to find a new market where they could take an existing product. The best thing was to come up with a hypothetical new market and give recommendations. How to cite Global Marketing efforts of Toyota Motors, Essay examples

Milbourn Manufacturing Production and Cash Budget

Question: Discuss about theMilbourn Manufacturingfor Production and Cash Budget. Answer: Introduction The below report has been prepared with an intention to test the production and cash budget of the company. The below reports will help the management to test the financial viability of the new project. Although looking at the financial numbers and the sales figures it looks like that the project is viable enough but these reports will test the outcomes and ensure whether the company is going in the correct direction or not. However, the company is required to base their results on some assumptions but these assumptions are must to reach out to some or the other conclusion. However, it is important that the assumptions that are being taken by the management should be realistic enough and should not be hypothetical. Part A Cash Budget of VGL Limited January February March April May Opening Balance $ 1,900,000 $ (21,386,000) $ 5,014,000 $ 32,347,500 $ 47,647,941 Receipts (Working Note 3) $ 13,464,000 $ 53,550,000 $ 48,883,500 $ 36,050,441 $ 29,598,070 A $ 15,364,000 $ 32,164,000 $ 53,897,500 $ 68,397,941 $ 77,246,012 Cash Expenses $ 1,550,000 $ 1,550,000 $ 1,550,000 $ 1,550,000 $ 1,550,000 Payment to Milbourn $ 35,200,000 $ 25,600,000 $ 20,000,000 $ 19,200,000 $ 16,000,000 B $ 36,750,000 $ 27,150,000 $ 21,550,000 $ 20,750,000 $ 17,550,000 Closing Balance (A-B) $ (21,386,000) $ 5,014,000 $ 32,347,500 $ 47,647,941 $ 59,696,012 January February March April A. Sales 220,000 160,000 125,000 120,000 B. Selling Price for customers $ 510 $ 510 $ 464 $ 422 C. Selling Price for retailers $ 306 $ 306 $ 278 $ 253 D. Revenue (A * C) $ 67,320,000 $ 48,960,000 $ 34,807,500 $ 30,407,832 20% cash receipts in the current month $ 13,464,000 $ 9,792,000 $ 6,961,500 $ 6,081,566 65% cash receipts in the next 30 days $ 43,758,000 $ 31,824,000 $ 22,624,875 15% cash receipts in the next 60 days $ 10,098,000 $ 7,344,000 Total cash collected $ 13,464,000 $ 53,550,000 $ 48,883,500 $ 36,050,441 Production Budget of Milbourn Manufacturing Since no information about the closing/opening stock is given, it is assumed that all the production done is sold in the next month. December January February March Production 2,20,000 1,60,000 1,25,000 1,20,000 Material Budget of Milbourn Manufacturing MATERIAL A December January February March Production (a) 2,20,000 1,60,000 1,25,000 1,20,000 Requirement per unit (b) 3 3 3 3 Total requirement(c= a*b) 6,60,000 4,80,000 3,75,000 3,60,000 Cost per kg (d) 3.50 3.50 3.50 3.50 Total cost (e=c*d) 2310000 1680000 1312500 1260000 MATERIAL B December January February March Production (a) 2,20,000 1,60,000 1,25,000 1,20,000 Requirement per unit (f) 6 6 6 6 Total requirement(g= a*f) 1320000 960000 750000 720000 Cost per kg (f) 4.50 4.50 4.50 4.50 Total cost (i=g*h) 59,40,000 43,20,000 33,75,000 3240000 MATERIAL C December January February March Production (a) 2,20,000 1,60,000 1,25,000 1,20,000 Requirement per unit (j) 2 2 2 2 Total requirement(k= a*j) 4,40,000 3,20,000 2,50,000 2,40,000 Cost per kg (l) 10 10 10 10 Total cost (m=k*l) 44,00,000 32,00,000 25,00,000 24,00,000 Total Material Cost (e+ i+ m) 1,26,50,000 92,00,000 71,87,500 69,00,000 Labour Budget of Milbourn Manufacturing December January February March Production 2,20,000 1,60,000 1,25,000 1,20,000 Hours per unit 0.50 0.50 0.50 0.50 Total Hours 1,10,000 80,000 62,500 60,000 Labour Rate per hour 36 36 36 36 Total Labour Cost 39,60,000 28,80,000 22,50,000 21,60,000 Cash Budget of Milbourn Manufacturing December January February March Opening Balance $ 1,550,000 $ (3,342,500) $ 18,730,000 $ 31,990,625 Amount received from VGL $ 35,200,000 $ 25,600,000 $ 20,000,000 Total Receipts (A) $ 1,550,000 $ 31,857,500 $ 44,330,000 $ 51,990,625 Labour cost $ 3,960,000 $ 2,880,000 $ 2,250,000 $ 2,250,000 Overhead Cost $ 300,000 $ 300,000 $ 300,000 $ 300,000 Material cost $ 632,500 $ 9,947,500 $ 9,789,375 $ 7,575,625 B $ 4,892,500 $ 13,127,500 $ 12,339,375 $ 10,125,625 Closing Balance (A-B) $ (3,342,500) $ 18,730,000 $ 31,990,625 $ 41,865,000 Working Note 1 MATERIAL A December January February March Production (a) 2,20,000 1,60,000 1,25,000 1,20,000 Requirement per unit (b) 3 3 3 3 Total requirement(c= a*b) 6,60,000 4,80,000 3,75,000 3,60,000 Cost per kg (d) 3.50 3.50 3.50 3.50 Total cost (e=c*d) 2,310,000 1,680,000 1,312,500 1,260,000 MATERIAL B December January February March Production (a) 2,20,000 1,60,000 1,25,000 1,20,000 Requirement per unit (f) 6 6 6 6 Total requirement(g= a*f) 1,320,000 960,000 750,000 720,000 Cost per kg (f) 4.50 4.50 4.50 4.50 Total cost (i=g*h) 59,40,000 43,20,000 33,75,000 3240000 MATERIAL C December January February March Production (a) 2,20,000 1,60,000 1,25,000 1,20,000 Requirement per unit (j) 2 2 2 2 Total requirement(k= a*j) 4,40,000 3,20,000 2,50,000 2,40,000 Cost per kg (l) 10 10 10 10 Total cost (m=k*l) 44,00,000 32,00,000 25,00,000 24,00,000 Total Material Cost (e+ i+ m) 1,26,50,000 92,00,000 71,87,500 69,00,000 5% cash payments in the current month $ 632,500 $ 460,000 $ 359,375 $ 345,000 75% cash payments in the next 30 days $ 9,487,500 $ 6,900,000 $ 5,390,625 20% cash payments in the next 60 days $ 2,530,000 $ 1,840,000 Total cash payment $ 632,500 $ 9,947,500 $ 9,789,375 $ 7,575,625 Working Note 2 December January February March Production 2,20,000 1,60,000 1,25,000 1,20,000 Sales@160 3,52,00,000 2,56,00,000 2,00,00,000 1,92,00,000 Receipts from VGL Ltd. - 3,52,00,000 2,56,00,000 2,00,00,000 Part B Budgetary Slack The financial controller of the manufacturer Milbourn Manufacturers Ltd, Ross Kirkham was very concerned about the budgeted numbers that has been set up above. It has provided that if the budgeted numbers are being selected as performance targets then in that case the same could let to behavioural problems such as budgetary slack. Budgetary slack means the doubt/uncertainty about the forecasted results. It may be the: - a) Under-estimation of the budgeted revenue b) Over-estimation of the budgeted expenses. Budgetary slack tends to give a false representation that the outcome of the associated business has turned out better than anticipated. Some instances of budgetary slack are intentional, others are not, and many more fall somewhere in between. Thus in that case either it is important for the management to set up targets that looks reasonable in all respects or if the same are achieved then they should be treated as budgetary slacks. If the budgeted targets are not realistic, then in that case, the same could de motivates the employees which may put the organisation on right track in long run. Thus in that case it is very important to keep managers who are actually involved in the production cycle to be a part of the budgeting exercise. Participative Budgeting In this budgeting exercise, the people who are being getting impacted by the budget are actively involved in the exercise that took place for creation of the budget. It is very important to keep managers who are actually involved in the production cycle to be a part of the budgeting exercise. It has been well stated that being in case of Participative Budgeting, the core people who are likely be involved in the implementation of the budgeted numbers are involved at the initial level tends to make the budget more realistic and more alive. The probability of the success of the budget increases in multiple folds in this case. These types of budgets tends to give the employees a feeling that the management is aware about the financial limitations and considering the same the budget has been prepared. The employees of the company feel motivated in this regard and being the budgets are being made with an intention to curtain the expenditures, the participation of the employees tends to mak e it more realistic. The attached advantages of Participative Budgeting are as follows: The forecast basis and assumptions that has been taken into considerations tends to be more realistic. The quality of the forecasts improves in this case. The employees involved in the budget setting exercise tend to feel more motivated. The results expected in this case are more achievable then in any other case. The attached disadvantages of Participative Budgeting are as follows: Being in case of Participative Budgeting, the people who are being getting impacted by the budget are actively involved in the exercise that took place for creation of the budget, there is always a probability of creation of conservative budget. These kinds of budgets are conservative in nature with high probability of achieving with any extra efforts expected to be put in by the employees. These kinds of budgets generally takes more time to decide on and thus are time consuming and expensive. These kinds of budgets may let the management towards introduction of budgetary slacks. Sometimes the managers that are involved in the exercise are unqualified to participate in the setting exercise. Cash Management by Milbourn Manufacturing and VGL limited. There might be a probability that both Milbourn Manufacturing and VGL limited may face trouble in cash management in the initial stages. In the given case, both the companies i.e. Milbourn Manufacturing and VGL limited faced cash shortages issues in their initial stages. There are number of strategies which can be adopted by the management of both the companies to overcome their liquidity crunches. Some of them are discussed as follows: Cash Discount: The management of the company can provide cash discount to the customers in order to get prompt payment from them. This will help them in meeting down their cash requirement in the initial stages. Although they would have to bear the additional cash discount cost but the same is not important at initial stages. Watch sales: The management is supposed to watch the movement in the sales closely and thus accordingly they should make changes in their expenses trend so as to manage their cash management. Review budget: If the company is more dependent on the short term funding needs then in that case, it is important for the management to review their budget lines and check if any changes are required to be made at the middle. Overdraft facility: The banks now a days offer cash over draft facilities to the companies to overcome the short term cash shortage problems. The company can use them and accordingly can meet out their needs and requirements. Consequences of Cash Shortage There might be some situations where the management of the company would not be in a position to keep a control on the prevailing cash shortages. The situation of cash shortage may put some unnecessary pressure on the income statement of the company. The management of the company would not be in a position to work freely. They would always be pressurised and would always keep the cash shortage point into consideration at times of taking all the decisions which might impact the company in long run. The reputation of the company would also get impacted by this act of the management, where the management would always ask the vendors to extend their credit limit and on the other hand would ask the debtors for prompt payment. In the current environment, it is very important for the companies to give sufficient credit to their customers ad for the same they require enough cash with themselves. The motivation level of the employees would also get impacted by the same as they know that the c ash position of the company is not strong.( Johnston K, demand media) Consequences of too Much Cash Similar way like we have consequences in having cash shortages in the books, we also have issues if the cash balance is too high. An adequate cash management is very important. The management in this case should manage the cash and put them in liquid sources where they can earn interest on the amount. The company pay unnecessary interest on the debt in spite to the fact that they have more cash in their very hands. The management if have more cash in their hand, they would lose the opportunity of investing the same in new projects and ventures as it would be treated as a loose of opportunity for the company. Excess cash would always carry a risk of theft. Excess cash on the other hand would create internal conflict within the organisation.( John C, demand Media) References Reference.com, What are the benefits of participative budgeting, Viewed on 25th Sept 2016, https://www.reference.com/world-view/benefits-participative-budgeting-ea68c5588099ab8b Artcile library, Agarwal R, Behavioural Implications of Budgeting (6 Implications), Viewed on 25th Sept 2016, https://www.yourarticlelibrary.com/accounting/budgeting-accounting/behavioural-implications-of-budgeting-6-implications/52800/ Small business, Kokemuller N, Why Is It a Financial Risk for Businesses to Have Too Much Cash on Hand, Viewed on 25th Sept 2016, https://smallbusiness.chron.com/financial-risk-businesses-much-cash-hand-81214.html Small business, John C, Advantages and Disadvantages of Excess of Cash for an Organization, Viewed on 25th Sept 2016, https://smallbusiness.chron.com/advantages-disadvantages-excess-cash-organization-22792.html Small business, Johnston K, Understanding Cash Shortage Overage in the Income Statement, Viewed on 25th Sept 2016, https://smallbusiness.chron.com/understanding-cash-shortage-overage-income-statement-37788.html