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	19,261		13,936
Central	4,747		4,214
West	4,128		3,264

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		18,700		$22		$411,400
Central		4,700		22		103,400
West		4,300		22		94,600
Total		27,700				$609,400
12" × 16" Frame:
East		13,400		$37		$495,800
Central		4,300		37		159,100
West		3,200		37		118,400
Total		20,900				$773,300
Total revenue from sales						$1,382,700

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 $23 and the unit selling price for the 12" × 16" frame is expected to increase to $39, 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			%

Feedback

To calculate the difference subtract budget from actual sales.

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

Answer 1

	Unit Sales, Year Ended 20Y8	Increase (Decrease) Actual Over Budget
	Budget	Actual Sales	Amount	Percent
8" × 10" Frame:
East	18700	19261	$ 561	3%
Central	4700	4747	$ 47	1%
West	4300	4128	$   (172)	-4%
12" × 16" Frame:
East	13400	13936	$    536	4%
Central	4300	4214	$     (86)	-2%
West	3200	3264	$ 64	2%

Answer 2

		Percentage	20Y9
	20Y8	Increase	Budgeted
	Actual	(Decrease)	Units (rounded)
Units
8" × 10" Frame:
East	19261	3%	19839
Central	4747	1%	4794
West	4128	-4%	3963
12" × 16" Frame:
East	13936	4%	14493
Central	4214	-2%	4230
West	3264	2%	3329

Answer 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	19839	$                      23	$ 456297
Central	4794	$                      23	$ 110262
West	3963	$                      23	$ 91149
Total	28596	$                      23	$ 657708
12" × 16" Frame:
East	14493	$ 39	$ 565227
Central	4230	$ 39	$ 164970
West	3329	$ 39	$ 129831
Total	22052	$ 39	$ 860028
Total revenue from sales			$ 1517736

In case of any doubt, please comment.

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