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:

1. Unit Sales
   	8" × 10" Frame		12" × 16" Frame
   East	26,355		9,010
   Central	6,695		3,626
   West	5,820		3,060

   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		25,100		$21		$527,100
   Central		6,500		21		136,500
   West		6,000		21		126,000
   Total		37,600				$789,600
   12" × 16" Frame:
   East		8,500		$36		$306,000
   Central		3,700		36		133,200
   West		3,000		36		108,000
   Total		15,200				$547,200
   Total revenue from sales						$1,336,800

   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 $22 and the unit selling price for the 12" × 16" frame is expected to increase to $38, effective January 1, 20Y7.

   Required:

   1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y6, 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 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. Use the minus sign to indicate a decrease in percent. 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

Answer:

1.

		Unit Sales,				Increase (Decrease)
		Year Ended 20Y6				Actual Over Budget
		Budget		Actual Sales		Amount	Percent
8" × 10" Frame:
	East	26355		25100		-1255	-4.76%
	Central	6695		6500		-195	-2.91%
	West	5820		6000		180	3.09%
12" × 16" Frame:
	East	9010		8500		-510	-5.66%
	Central	3626		3700		74	2.04%
	West	3060		3000		-60	-1.96%

2.

		20Y6		Percentage	20Y7
		Actual		Increase	Budgeted
		Units		(Decrease)	Units (rounded)
8" × 10" Frame:
	East	25100		-4.76%	23905
	Central	6500		-2.91%	6311
	West	6000		3.09%	6185
12" × 16" Frame:
	East	8500		-5.66%	8019
	Central	3700		2.04%	3775
	West	3000		-1.96%	2941

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	23,905	$22	$525,910
Central	6,311	$22	$138,842
West	6,185	$22	$136,070
Total	36,401		$800,822
12" × 16" Frame:
East	8,019	$38	$304,722
Central	3,775	$38	$143,450
West	2,941	$38	$111,758
Total	14,735	$38	$559,930
Total revenue from sales			$1,360,752