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	30,385		11,960
Central	7,474		4,704
West	6,596		4,017

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		29,500		$25		$737,500
Central		7,400		25		185,000
West		6,800		25		170,000
Total		43,700				$1,092,500
12" × 16" Frame:
East		11,500		$40		$460,000
Central		4,800		40		192,000
West		3,900		40		156,000
Total		20,200				$808,000
Total revenue from sales						$1,900,500

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 $26 and the unit selling price for the 12" × 16" frame is expected to increase to $42, 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

Part 1	Increase or decrease of actual unit sales for the year ended December 31, 20Y8, over budget.
		Unit Sales
		Budget	Actual	Increse,              ( Decrese) Acutal -Budget	% (Increase( Decrase) / Budget)
8" × 10" Frame:	East	29,500.00	30,385.00	885.00	3.00%
	Central	7,400.00	7,474.00	74.00	1.00%
	West	6,800.00	6,596.00	(204.00)	-3.00%
12" × 16" Frame	East	11,500.00	11,960.00	460.00	4.00%
	Central	4,800.00	4,704.00	(96.00)	-2.00%
	West	3,900.00	4,017.00	117.00	3.00%
Part2	The unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y9.
		Actual Units 20Y8	% incrrese (decrese)	20Y9 Budgeted Units (rounded)
8" × 10" Frame:	East	30,385.00	3%	31,297.00
	Central `	7,474.00	1%	7,549.00
	West	6,596.00	-3%	6,398.00
12" × 16" Frame	East	11,960.00	4%	12,438.00
	Central	4,704.00	-2%	4,610.00
	West	4,017.00	3%	4,138.00
Part 3	Sales budget for the year ending December 31, 20Y9.
		Unit Sales Volume	Unit Selling Price	Total Sales (Unit Sales * Unit selling price)
8" × 10" Frame:	East	31297.00	26	$              813,722.00
	Central	7549.00	26	$              196,274.00
	West	6398.00	26	$              166,348.00
	Total			$          1,009,996.00
12" × 16" Frame	East	12438.00	42	$              522,396.00
	Central	4610.00	42	$              193,620.00
	West	4138.00	42	$              173,796.00
	Total			$              716,016.00
	Total Revenue From Sales			$          1,726,012.00