Question 4: Oman Company manufactures two products OM1 and OM2. Its sales department has three divisions: Salalah, Muscat and Sohar. Initial estimates for the sales budgets for the year ending 31 December 2021 which are based on the assessments of the divisional executives are as follows; Product OM1 : Salalah 55,000 units: Muscat 115,000 units and Sohar: 28,000 units Product OM2: Salalah 73,000 units: Muscat 88,000 units and Sohar:0 Sales Prices: OM1: 4 OMR and OM2= 5 OMR in all areas. Arrangements are made for the extensive advertising of product OM1 and OM2 and it is estimated that Salalah division sales will increase by 32,000 units. Arrangements are also made to advertise and distribute product OM2 in the Sohar area in the second half of 2021 when sales are expected to be 110,000 units. Since the estimated sales of the Muscat division represented an unsatisfactory target, it is agreed to increase both the estimates by 18 %. Prepare a sales budget for the year to 31 December 2021.
Question 4: Oman Company manufactures two products OM1 and OM2. Its sales department has three divisions: Salalah, Muscat and Sohar. Initial estimates for the sales budgets for the year ending 31 December 2021 which are based on the assessments of the divisional executives are as follows; Product OM1 : Salalah 55,000 units: Muscat 115,000 units and Sohar: 28,000 units Product OM2: Salalah 73,000 units: Muscat 88,000 units and Sohar:0 Sales Prices: OM1: 4 OMR and OM2= 5 OMR in all areas. Arrangements are made for the extensive advertising of product OM1 and OM2 and it is estimated that Salalah division sales will increase by 32,000 units. Arrangements are also made to advertise and distribute product OM2 in the Sohar area in the second half of 2021 when sales are expected to be 110,000 units. Since the estimated sales of the Muscat division represented an unsatisfactory target, it is agreed to increase both the estimates by 18 %. Prepare a sales budget for the year to 31 December 2021.
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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Question 4: Oman Company manufactures two products OM1 and OM2. Its sales department has three divisions: Salalah, Muscat and Sohar. Initial estimates for the sales budgets for the year ending 31 December 2021 which are based on the assessments of the divisional executives are as follows; Product OM1 : Salalah 55,000 units: Muscat 115,000 units and Sohar: 28,000 units Product OM2: Salalah 73,000 units: Muscat 88,000 units and Sohar:0 Sales Prices: OM1: 4 OMR and OM2= 5 OMR in all areas. Arrangements are made for the extensive advertising of product OM1 and OM2 and it is estimated that Salalah division sales will increase by 32,000 units. Arrangements are also made to advertise and distribute product OM2 in the Sohar area in the second half of 2021 when sales are expected to be 110,000 units. Since the estimated sales of the Muscat division represented an unsatisfactory target, it is agreed to increase both the estimates by 18 %. Prepare a sales budget for the year to 31 December 2021.
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