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:

	Unit Sales
	8" × 10" Frame		12" × 16" Frame
East	20,909		11,856
Central	5,555		3,822
West	4,896		3,090

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		20,300		$17		$345,100
Central		5,500		17		93,500
West		5,100		17		86,700
Total		30,900				$525,300
12" × 16" Frame:
East		11,400		$32		$364,800
Central		3,900		32		124,800
West		3,000		32		96,000
Total		18,300				$585,600
Total revenue from sales						$1,110,900

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 $18 and the unit selling price for the 12" × 16" frame is expected to increase to $34, 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		Difference	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

1		Unit Sales, Year Ended 20Y6		Increase(Dec) Actual Over Budget
		Budget	Actual Sales	Difference	Percent				Budget	Actual Sales
	8''X 10" Frame							8''X 10" Frame:
	East	345100	376362	31262	9%			East	20300*17	20909*18
	Central	93500	99990	6490	7%			Central	5500*17	5555*18
	West	86700	88128	1428	2%			West	5100*17	4896*18
	12''X 16" Frame							12''X 16" Frame:
	East	364800	403104	38304	11%			East	11400*32	11856*34
	Central	124800	129948	5148	4%			Central	3900*32	3822*34
	West	96000	105060	9060	9%			West	3000*32	3090*34
		Actual Sales	Percent	Budgeted
2		2016		2017
	8''X 10" Frame
	East	20909	9%	22803
	Central	5555	7%	5941
	West	4896	2%	4977
	12''X 16" Frame
	East	11400	11%	12597
	Central	3900	4%	4061
	West	3000	9%	3283
3	Raphael Frame Company
	Sales Budget
	For the Year ending Dec 31, 20X7
	Product & Area	Unit Sales Vol	Unit Sales Price	Total Sales
	8''X 10" Frame
	East	22803	17	387653
	Central	5941	17	100990
	West	4977	17	84603
	Total	33720		573246
	12''X 16" Frame
	East	12597	32	403104
	Central	4061	32	129948
	West	3283	32	105060
	Total	19941		638112
	Total Revenue from Sales			1211358