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	30,056		10,920
Central	7,956		3,136
West	6,984		2,472

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		28,900		$24		$693,600
Central		7,800		24		187,200
West		7,200		24		172,800
Total		43,900				$1,053,600
12" × 16" Frame:
East		10,400		$39		$405,600
Central		3,200		39		124,800
West		2,400		39		93,600
Total		16,000				$624,000
Total revenue from sales						$1,677,600

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 $25 and the unit selling price for the 12" × 16" frame is expected to increase to $41, 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

Answer 1

	Unit Sales, Year Ended 20Y8		Increase (Decrease) Actual Over Budget
	Budget	Actual Sales	Amount	Percent
8" × 10" Frame:
East	28,900.00	30,056	$ 1,156	4%
Central	7,800.00	7,956	$    156	2%
West	7,200.00	6,984	$   (216)	-3%
12" × 16" Frame:
East	10,400.00	10,920	$    520	5%
Central	3,200.00	3,136	$     (64)	-2%
West	2,400.00	2,472	$       72	3%

Answer 2

		Percentage	20Y9
	20Y8	Increase	Budgeted
	Actual	(Decrease)	Units (rounded)
Units
8" × 10" Frame:
East	30,056	4%	31,258
Central	7,956	2%	8,115
West	6,984	-3%	6,774
12" × 16" Frame:
East	10,920	5%	11,466
Central	3,136	-2%	3,073
West	2,472	3%	2,546

Answer 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	31,258	$                      25	$     781,456
Central	8,115	$                      25	$     202,878
West	6,774	$                      25	$     169,362
Total	46,148	$                      25	$ 1,153,696
12" × 16" Frame:
East	11,466	$                      41	$     470,106
Central	3,073	$                      41	$     126,004
West	2,546	$                      41	$     104,393
Total	17,085	$                      41	$     700,503
Total revenue from sales			$ 1,854,199

In case of any doubt, please comment.