Question

Forecast Sales Volume and Sales Budget

For 20Y8, Raphael Frame Company prepared the sales budget that follows.

At the end of December 20Y8, the following unit sales data were reported for the year:

	Unit Sales
	8" × 10" Frame		12" × 16" Frame
East	23,278		14,456
Central	5,757		5,292
West	5,044		4,429

Raphael Frame Company Sales Budget For the Year Ending December 31, 20Y8
Product and Area		Unit Sales Volume		Unit Selling Price		Total Sales
8" × 10" Frame:
East		22,600		$26		$587,600
Central		5,700		26		148,200
West		5,200		26		135,200
Total		33,500				$871,000
12" × 16" Frame:
East		13,900		$27		$375,300
Central		5,400		27		145,800
West		4,300		27		116,100
Total		23,600				$637,200
Total revenue from sales						$1,508,200

For the year ending December 31, 20Y9, unit sales are expected to follow the patterns established during the year ending December 31, 20Y8. The unit selling price for the 8" × 10" frame is expected to increase to $27 and the unit selling price for the 12" × 16" frame is expected to increase to $29, effective January 1, 20Y9.

Required:

1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y8, over budget. Use the minus sign to indicate a decrease in amount and percent. Round percents to the nearest whole percent.

		Unit Sales, Year Ended 20Y8				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 20Y9, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y9. Use the minus sign to indicate a decrease in percent. Round budgeted units to the nearest whole unit.

		20Y8 Actual Units		Percentage Increase (Decrease)	20Y9 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, 20Y9.

Raphael Frame Company
Sales Budget
For the Year Ending December 31, 20Y9
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 20Y8		Actual Over Budget
		Budget	Actual Sales	Amount	Percent
8" × 10" Frame:
	East	22600	23,278	678	3.0%
	Central	5700	5,757	57	1.0%
	West	5200	5,044	-156	-3.0%
12" × 16" Frame:
	East	13900	14,456	556	4.0%
	Central	5400	5,292	-108	-2.0%
	West	4300	4,429	129	3.0%

2

		20Y8	Percentage	20Y9
		Actual	Increase	Budgeted
		Units	(Decrease)	Units (rounded)
8" × 10" Frame:
	East	23,278	3.0%	23,976
	Central	5,757	1.0%	5,815
	West	5,044	-3.0%	4,893
12" × 16" Frame:
	East	14,456	4.0%	15,034
	Central	5,292	-2.0%	5,186
	West	4,429	3.0%	4,562

3

Raphael Frame Company
Sales Budget
For the Year Ending December 31, 20Y9
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
8" × 10" Frame:
East	23,976	26	623384.84
Central	5,815	26	151178.82
West	4,893	26	127209.68
Total	34,684		901,773
12" × 16" Frame:
East	15,034	27	405924.48
Central	5,186	27	140026.32
West	4,562	27	123170.49
Total	24,782		669,121
Total revenue from sales			1,570,895