In looking over the last year's sales figures, Audio-2-Go's sales budgeting team recalled the following: a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 40 percent. The number of units of Model A-1 to be sold was forecast to be 50 percent of last year's units. b. Model A-5 was introduced on November 1 of last year. It contains a built-in 20 GB hard drive and can be synchronized with several popular music software programs. Audio-2-Go brought out this model to match competitors' audio players, but the price is so much higher than other Audio-2-Go products, that sales have been disappointing. The company plans to discontinue this model on June 30 of this year, and thinks that monthly sales will remain at last year's level if the sales price remains unchanged. c. Audio-2-Go plans to introduce Model A-6 on July 1 of this year. It will be a high-end player that will be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is $180; unit sales are estimated to equal 2,000 per month. d. A competitor has announced plans to introduce an improved version of Model A-3. Audio-2-Go believes that the Model A-3 price must be cut 20 percent to maintain unit sales at last year's level. e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining constant. Required: 4 Prepare a sales forecast by product and in total for Audio-2-Go, Inc., for this year. Audio-2-Go, Inc. Sales Budget For This Year Model Price Total Sales A-1 A-2 A-3 A-4 A-5 A-6 Total Units
In looking over the last year's sales figures, Audio-2-Go's sales budgeting team recalled the following: a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 40 percent. The number of units of Model A-1 to be sold was forecast to be 50 percent of last year's units. b. Model A-5 was introduced on November 1 of last year. It contains a built-in 20 GB hard drive and can be synchronized with several popular music software programs. Audio-2-Go brought out this model to match competitors' audio players, but the price is so much higher than other Audio-2-Go products, that sales have been disappointing. The company plans to discontinue this model on June 30 of this year, and thinks that monthly sales will remain at last year's level if the sales price remains unchanged. c. Audio-2-Go plans to introduce Model A-6 on July 1 of this year. It will be a high-end player that will be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is $180; unit sales are estimated to equal 2,000 per month. d. A competitor has announced plans to introduce an improved version of Model A-3. Audio-2-Go believes that the Model A-3 price must be cut 20 percent to maintain unit sales at last year's level. e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining constant. Required: 4 Prepare a sales forecast by product and in total for Audio-2-Go, Inc., for this year. Audio-2-Go, Inc. Sales Budget For This Year Model Price Total Sales A-1 A-2 A-3 A-4 A-5 A-6 Total Units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Sales Forecast and Budget
Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are
attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built-
in hard drive; they can be put into fanny packs for use while working out. It is now early January, and
Audio-2-Go's budgeting team is finalizing the sales budget for this year. Sales in units and dollars for
last year were as follows:
Model
Number Sold
Price
Revenue
A-1
18,000
$70
$1,260,000
A-2
40,000
85
3,400,000
A-3
58,000
110
6,380,000
A-4
16,000
120
1,920,000
A-5
2,500
200
500,000
<
$13,460,000
In looking over the last year's sales figures, Audio-2-Go's sales budgeting team recalled the following:
a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model,
Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 40 percent. The
number of units of Model A-1 to be sold was forecast to be 50 percent of last year's units.
b. Model A-5 was introduced on November 1 of last year. It contains a built-in 20 GB hard drive and can
be synchronized with several popular music software programs. Audio-2-Go brought out this model
to match competitors' audio players, but the price is so much higher than other Audio-2-Go
products, that sales have been disappointing. The company plans to discontinue this model on June
30 of this year, and thinks that monthly sales will remain at last year's level if the sales price remains
unchanged.
c. Audio-2-Go plans to introduce Model A-6 on July 1 of this year. It will be a high-end player that will
be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is
$180; unit sales are estimated to equal 2,000 per month.
d. A competitor has announced plans to introduce an improved version of Model A-3. Audio-2-Go
believes that the Model A-3 price must be cut 20 percent to maintain unit sales at last year's level.
e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining
constant.
Required:
Transcribed Image Text:In looking over the last year's sales figures, Audio-2-Go's sales budgeting team recalled the following:
a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model,
Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 40 percent. The
number of units of Model A-1 to be sold was forecast to be 50 percent of last year's units.
b. Model A-5 was introduced on November 1 of last year. It contains a built-in 20 GB hard drive and can
be synchronized with several popular music software programs. Audio-2-Go brought out this model
to match competitors' audio players, but the price is so much higher than other Audio-2-Go
products, that sales have been disappointing. The company plans to discontinue this model on June
30 of this year, and thinks that monthly sales will remain at last year's level if the sales price remains
unchanged.
c. Audio-2-Go plans to introduce Model A-6 on July 1 of this year. It will be a high-end player that will
be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is
$180; unit sales are estimated to equal 2,000 per month.
d. A competitor has announced plans to introduce an improved version of Model A-3. Audio-2-Go
believes that the Model A-3 price must be cut 20 percent to maintain unit sales at last year's level.
e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining
constant.
Required:
4
Prepare a sales forecast by product and in total for Audio-2-Go, Inc., for this year.
Audio-2-Go, Inc.
Sales Budget
For This Year
Model
Price
Total Sales
A-1
A-2
A-3
A-4
A-5
A-6
Total
Units
$
$
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