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	26,670		13,462
Central	7,107		2,450
West	6,144		1,545

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		25,400		$35		$889,000
Central		6,900		35		241,500
West		6,400		35		224,000
Total		38,700				$1,354,500
12" × 16" Frame:
East		12,700		$36		$457,200
Central		2,500		36		90,000
West		1,500		36		54,000
Total		16,700				$601,200
Total revenue from sales						$1,955,700

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 $36 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

	Unit Sales, Year Ended 20Y6		Increase (Decrease) Actual Over Budget
	Budget	Actual Sales	Amount	Percent
8" × 10" Frame:
East	25400	26670	1270	5%
Central	6900	7107	207	3%
West	6400	6144	-256	-4%
12" × 16" Frame:
East	12700	13462	762	6%
Central	2500	2450	-50	-2%
West	1500	1545	45	3%
Solution 2
	20Y6 Actual Sales	Percentage Increase (Decrease)	20Y7 Budgeted Units (rounded)
8" × 10" Frame:
East	26670	5%	28004
Central	7107	3%	7320
West	6144	-4%	5898
12" × 16" Frame:
East	13462	6%	14270
Central	2450	-2%	2401
West	1545	3%	1591
Solution 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	28004	36	1008144
Central	7320	36	263520
West	5898	36	212328
Total	41222		1483992
12" × 16" Frame:
East	14270	38	542260
Central	2401	38	91238
West	1591	38	60458
Total	18262		693956
Total revenue from sales			2177948