Excel and Memo work .

Mohopo Collections Inc.

Memo

To:	Board of Directors
From:	Devarshi Patel
cc:	Ellen F. Monk
Date:	4/7/17
Re:	Budget Forecast

This memo provides information about a forecasting tool to estimate budget funds for the year 2017. This forecast modeling tool in excel will allow the company to make budget requisitions and determine how different scenarios would affect the department’s budget. This will greatly help the Finance department forecast its 2017 budget needs so it can request working capital if required. The budget requisition for 2017 will cover three campaigns, Cabal Credit Card, Regional Bank, and Oak Knoll Securities. The company can follow through with various scenarios listed below.

Scenarios: Optimist High – Threshold required for a high-volume discount is 50,000 units, the USPS credits for old invoices, and Regional Bank decides to mail 5,000 units a month during February, March, and April. This will be costly for the company and the company will need to order 150,000 units of Jumbo Envelopes at year end. Optimist Low – Threshold required for high-volume discount is 75,000 units, the USPS credits for old invoices, and Regional Bank decides to mail 15,000 units a month during February, March, and April. This will be slightly less costly for the company and the company will need to order 90,000 units of Jumbo Envelopes at year end.

Normal – Threshold required for a high-volume discount is 100,000 units, the USPS does not credit for old invoices, and Regional Bank will not request additional direct-mail campaigns. This is the least costly option and the company will need to order 60,000 units of Jumbo Envelopes at year end.

Pessimist – Threshold required for a high-volume discount is 150,000 units, the USPS does not credit for old invoices, and Regional Bank will not request additional direct-mail campaigns. This is the second least costly option and the company will need to order 60,000 units of Jumbo Envelopes at year end.

After analyzing these scenarios in the forecast modeling tool, it seems the first scenario, Optimist High, will put the company in great debt as the total yearly cost will be $371,420 which exceeds the average total yearly cost of the other scenarios by over $100,000. This scenario should carefully be analyzed by management as 2017 arrives. I also advise using less of the costly envelopes as the new year approaches. Visual representations of the data will be shown on the next page.

	Optimist High	Optimist Low	Normal	Pessimist
Yearly Cost Grand Total	$371,420	$283,490	$254,525	$258,200
Yearly Mail Volume	240,000	180,000	150,000	150,000
Year End Jumbo Envelope Inventory	(150,000)	(90,000)	(60,000)	(60,000)
Reorder Jumbo Envelops?	Yes	Yes	Yes	Yes
Yearly Text Messaging Volume	90,000	90,000	90,000	90,000
Yearly E-mail Volume	160,000	160,000	160,000	160,000
Costs Over 2016 Values?	Yes	Yes	Yes	Yes

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