ISSN 1940-204X
Let’s Go Aero Travel Trailers: A Case for Incorporating the New Model of the Organization into the Teaching of Budgeting
Sally Wright University of Massachusetts-Boston
INTRODUCTION
Let’s Go Aero manufactures travel trailers bought primarily by young families and retirees interested in a light, low-cost trailer that can easily be pulled by a mid-sized family car. The market for travel trailers has expanded nicely over the past few years due to the number of families seeking a relatively low-cost, outdoor vacation experience. But in the view of Let’s Go Aero’s president, Mark Newman, the real growth in the future is in the retiree market. Newman believes the vigorous health of the average retiree, coupled with the
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She blames Tom Sloan. Let’s Go’s current aluminum vendor refuses to sign a just-in-time prime vendor contract due to Tom’s uneven production schedule and his refusal to pay on time. Tom has been seen reading the help wanted ads, and Vicky over heard him talking to an employment agency. In keeping with the policy set by Tom as Let’s Go’s production manager, the amount of sheet aluminum on hand at the end of each month must be equal to one-half of the following month’s production needs for sheet aluminum. The raw materials inventory on December 31, 2010, was budgeted to be 39,000 square yards. The company does not keep track of work-in-process inventories. Budgeted expenses for Aluminum and other materials, as well as wages, heat, light and power, equipment rental, equipment purchases, depreciation, and selling and administrative for the first six months of 2011 are given below.
January February March
TRAILER PRODUCTION
Sheet aluminum represents the company’s single most expensive raw material. Each travel trailer requires 30 square yards of sheet aluminum. The wholesale cost of sheet aluminum varies dramatically according to the time of year. The cost per square yard can vary from $15 in the spring, when new construction tends to start, to $8 in December and January, when demand is lowest. The use of aluminum in vehicles, including
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