Question

1. Sales Budget

   Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $637, and the S12L5 sells for $402. Projected sales (number of speakers) for the coming five quarters are as follows:

   	S12L7	S12L5
   First quarter, 20Y1	800	1,300
   Second quarter, 20Y1	2,200	1,400
   Third quarter, 20Y1	5,600	5,300
   Fourth quarter, 20Y1	4,600	3,900
   First quarter, 20Y2	900	1,200

   The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

   Required:

   Prepare a sales budget for each quarter of 20Y1 and for the year in total. Show sales by product and in total for each time period. Do not include a multiplication symbol as part of your answer.

   Stillwater Designs
   Sales Budget
   For the Year Ended December 31, 20Y1
   	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
   S12L7:
   Units
   Price	$	$	$	$	$
   Sales	$	$	$	$	$
   S12L5:
   Units
   Price	$	$	$	$	$
   Sales	$	$	$	$	$
   Total sales	$	$	$	$	$

   Feedback

   How will Stillwater Designs use this sales budget?

   1. Stillwater Designs will use the sales budget in planning as the basis for the production budget.
   2. The company can also compare actual sales against the budget to see if expectations were achieved.
   3. Both 1 and 2
   4. None of the above

Answer 1

Ans.	Stillwater Designs
	Sales budget
	For the Year Ended December 31, 20X1
		First quarter	Second quarter	Third quarter	Fourth quarter	Total
	S12L7:
	Units	800	2200	5600	4600	1,100,000
	Price	$637	$637	$637	$637	$637
	Sales (a)	$509,600	$1,401,400	$3,567,200	$2,930,200	$8,408,400
	S12L5:
	Units	1300	1400	5300	3900	1,100,000
	Price	$402	$402	$402	$402	$402
	Sales   (b)	$522,600	$562,800	$2,130,600	$1,567,800	$4,783,800
	Total sales   (a + b)	$1,032,200	$1,964,200	$5,697,800	$4,498,000	$13,192,200
	Sales = Units * Price
Ans.	Option 3    both 1 and 2
	Sales budget provides the base (i.e. number of units sold) for production budget and it
	can also be used for the comparision with actual results.