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	23,310		11,024
Central	6,180		4,312
West	5,432		3,605

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		22,200		$23		$510,600
Central		6,000		23		138,000
West		5,600		23		128,800
Total		33,800				$777,400
12" × 16" Frame:
East		10,400		$33		$343,200
Central		4,400		33		145,200
West		3,500		33		115,500
Total		18,300				$603,900
Total revenue from sales						$1,381,300

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 $24 and the unit selling price for the 12" × 16" frame is expected to increase to $35, 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.

		Budget		Actual Sales		Amount	Percent
8" × 10" Frame:
	East	22200		23310		1110	5 %
	Central	6000		6180		4140	3 %
	West	5600		5432		-168	-3 %
12" × 16" Frame:
	East	10400		11024		624	6 %
	Central	4400		4312		-88	-2 %
	West	3500		3605		105	3 %

2.

		20Y8 Actual Units		Percentage Increase (Decrease)	20Y9 Budgeted Units (rounded)
8" × 10" Frame:
	East	23310		%5	24476
	Central	6180		3%	6365
	West	5432		-3%	5269
12" × 16" Frame:
	East	11024		6%	11685
	Central	4312		-2%	4226
	West	3605		3%	3713

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	24476	$24	$587424
Central	6365	24	152760
West	5269	24	126456
Total			$866640
12" × 16" Frame:
East	11685	$35	$408975
Central	4226	35	147910
West	3713	35	129955
Total			$686840
Total revenue from sales			$1553480