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	26,460		14,840
Central	6,180		5,390
West	5,280		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		25,200		$29		$730,800
Central		6,000		29		174,000
West		5,500		29		159,500
Total		36,700				$1,064,300
12" × 16" Frame:
East		14,000		$30		$420,000
Central		5,500		30		165,000
West		4,300		30		129,000
Total		23,800				$714,000
Total revenue from sales						$1,778,300

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 $30 and the unit selling price for the 12" × 16" frame is expected to increase to $32, 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

Solution 1
	Unit Sales, Year Ended 20Y8	Increase (Decrease) Actual Over Budget
	Budget	Actual Sales	Amount	Percent
8" × 10" Frame:
East	25200	26460	1260	5%
Central	6000	6180	180	3%
West	5500	5280	-220	-4%
12" × 16" Frame:
East	14000	14840	840	6%
Central	5500	5390	-110	-2%
West	4300	4429	129	3%

Solution 2
	20Y8 Actual Sales	Percentage Increase (Decrease)	20Y9 Budgeted Units (rounded)
8" × 10" Frame:
East	26460	5%	27783
Central	6180	3%	6365
West	5280	-4%	5069
12" × 16" Frame:
East	14840	6%	15730
Central	5390	-2%	5282
West	4429	3%	4562

Solution 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	27783	29	805707
Central	6365	29	184585
West	5069	29	147001
Total	39217		1137293
12" × 16" Frame:
East	15730	30	471900
Central	5282	30	158460
West	4562	30	136860
Total	25574		767220
Total revenue from sales			1904513