What are two possible explanations for the difference between the marketing firm’s estimate and Ms. Winters’?

The success of a budget program is largely determined by the way a budget is developed. Oftentimes, the budget is imposed from above, with little participation by lower-level managers. However, in the most successful budget programs, managers actively participate in preparing their own budgets. The first step in the budgeting process is the preparation of the sales budget, which is a detailed schedule showing the expected sales for the budget period. An accurate sales budget is the key to the entire budgeting process.

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The controller of Tree Huggers Paper Company, a company that uses scrap from lumber yards to make eco-friendly note cards, has just received two forecasts for sales in the West Coast District for the coming year. Based on an analysis of consumer spending and economic trends, a marketing research firm estimates sales of $1 million for next year. Suzanne Winters, the district sales manager, estimates sales of only $850,000.

The controller wants your advice on the estimate that should be used in developing next year’s budget.

In your original post, answer the following:

What are two possible explanations for the difference between the marketing firm’s estimate and Ms. Winters’?

Suppose that instead of $850,000, Ms. Winters estimates $1.1 million in sales. What are two possible explanations for the difference between the marketing firm’s estimate and Ms. Winters’?

Do any of these explanations suggest unethical behavior by Ms. Winters?

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