Question

Forecast Sales Volume and One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.Sales Budget

For 20Y6, Raphael Frame Company prepared the sales budget that follows.

At the end of December 20Y6, the following unit sales data were reported for the year:

	Unit Sales
	8" × 10" Frame		12" × 16" Frame
East	20,055		11,978
Central	4,944		4,018
West	4,224		3,296

Raphael Frame Company Sales Budget For the Year Ending December 31, 20Y6
Product and Area		Unit Sales Volume		Unit Selling Price		Total Sales
8" × 10" Frame:
East		19,100		$20		$382,000
Central		4,800		20		96,000
West		4,400		20		88,000
Total		28,300				$566,000
12" × 16" Frame:
East		11,300		$21		$237,300
Central		4,100		21		86,100
West		3,200		21		67,200
Total		18,600				$390,600
Total revenue from sales						$956,600

For the year ending December 31, 20Y7, unit sales are expected to follow the patterns established during the year ending December 31, 20Y6. The unit selling price for the 8" × 10" frame is expected to increase to $21 and the unit selling price for the 12" × 16" frame is expected to increase to $23, effective January 1, 20Y7.

Required:

1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y6, over An accounting device used to plan and control resources of operational departments and divisions.budget. Use the minus sign to indicate a decrease in amount and percent. Round percents to the nearest whole percent.

		Unit Sales, Year Ended 20Y6				Increase (Decrease) Actual Over Budget
		Budget		Actual Sales		Amount	Percent
8" × 10" Frame:
	East						%
	Central						%
	West						%
12" × 16" Frame:
	East						%
	Central						%
	West						%

2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 20Y7, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y7. Use the minus sign to indicate a decrease in percent. Round budgeted units to the nearest whole unit.

		20Y6 Actual Units		Percentage Increase (Decrease)	20Y7 Budgeted Units (rounded)
8" × 10" Frame:
	East			%
	Central			%
	West			%
12" × 16" Frame:
	East			%
	Central			%
	West			%

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3. Prepare a sales budget for the year ending December 31, 20Y7.

Raphael Frame Company
Sales Budget
For the Year Ending December 31, 20Y7
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
8" × 10" Frame:
East		$	$
Central
West
Total			$
12" × 16" Frame:
East		$	$
Central
West
Total			$
Total revenue from sales

Answer 1

1

		Unit Sales,		Increase (Decrease)
		Year Ended 20Y6		Actual Over Budget
		Budget	Actual Sales	Amount	Percent
8" × 10" Frame:
	East	19,100	20,055	955	5.00%
	Central	4,800	4,944	144	3.00%
	West	4,400	4,224	-176	-4.00%
12" × 16" Frame:
	East	11,300	11,978	678	6.00%
	Central	4,100	4,018	-82	-2.00%
	West	3,200	3,296	96	3.00%

2

		20Y6		Percentage	20Y7
		Actual		Increase	Budgeted
		Units		(Decrease)	Units (rounded)
8" × 10" Frame:
	East	20,055		5.00%	21057.75
	Central	4,944		3.00%	5092.32
	West	4,224		-4.00%	4055.04
12" × 16" Frame:
	East	11,978		6.00%	12696.68
	Central	4,018		-2.00%	3937.64
	West	3,296		3.00%	3394.88

3

Raphael Frame Company
Sales Budget
For the Year Ending December 31, 20Y7
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
8" × 10" Frame:
East	21057.75	21	442212.75
Central	5092.32	21	106938.72
West	4055.04	21	85155.84
Total	30205.11	21	634307.31
12" × 16" Frame:
East	12696.68	23	292023.64
Central	3937.64	23	90565.72
West	3394.88	23	78082.24
Total	20029.2	23	460671.6
Total revenue from sales (634307.31+460671.6)			1094978.91