Question

Forecast Sales Volume and 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	8,755		3,686
Central	6,510		3,090
West	12,348		5,616

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		8,500		$16		$136,000
Central		6,200		16		99,200
West		12,600		16		201,600
Total		27,300				$436,800
12" × 16" Frame:
East		3,800		$30		$114,000
Central		3,000		30		90,000
West		5,400		30		162,000
Total		12,200				$366,000
Total revenue from sales						$802,800

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 $17 and the unit selling price for the 12" × 16" frame is expected to increase to $32, effective January 1, 20Y7.

Required:

1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y6, over budget.

Enter any decreases beginning with a minus (-) sign.

		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.

Enter any decreases beginning with a minus (-) sign. 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			%

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.

						Increase (Decrease)
		Unit Sales,				Actual Over Budget
		Year Ended 20Y6
		Budget		Actual Sales		Units	Percent
8" × 10" Frame:
	East	8500		8755		255	3.00%
	Central	6200		6510		310	5.00%
	West	12600		12348		-252	-2.00%
12" × 16" Frame:
	East	3800		3686		-114	-3.00%
	Central	3000		3090		90	3.00%
	West	5400		5616		216	4.00%

Units Increase / (Decrease) = Actual Sales units - Budgeted Sales units
Percent Increase / (Decrease) = Unit Increase / (Decrease) / Budgeted Sales units x 100

2.

				Percentage	20Y7
		20Y6		Increase	Budgeted
		Actual		(Decrease)	Units (rounded)
		Units
8" × 10" Frame:
	East	8755		3.00%	9018
	Central	6510		5.00%	6836
	West	12348		-2.00%	12101
12" × 16" Frame:
	East	3686		-3.00%	3575
	Central	3090		3.00%	3183
	West	5616		4.00%	5841

Budgeted Units = Actual Units + Actual Units x Percent Increase / (Decrease)
Budgeted Units have been rounded off to nearest 1

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	9018	$   17.00	$    1,53,306.00
Central	6836	$   17.00	$    1,16,212.00
West	12101	$   17.00	$    2,05,717.00
Total			$    4,75,235.00
12" × 16" Frame:
East	3575	$   32.00	$    1,14,400.00
Central	3183	$   32.00	$    1,01,856.00
West	5841	$   32.00	$    1,86,912.00
Total			$    4,03,168.00
Total revenue from sales			$    8,78,403.00