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 25,000 A-2 34,000 51,000 $ 60 80 100 $1,500,000 2,720,000 5,100,000 A-3 A-4 16,000 140 2,240,000 A-5 4,000 220 880,000 $12,440,000 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 20 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 $185; unit sales are estimated to equal 3,500 per month. t year's level. 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 15 percent to maintain unit sales at e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining constant.

Q: What is the purpose of a budget in financial management?

A: Financial management refers to the process of planning, organizing, directing, and controlling the…

Q: Discuss why the production quantities that are prescribed in the production budget should be…

A: The sales budget is prepared to ascertain the projected sales during the coming period, on the basis…

Q: What are the benefits of tying a budget to the overall goals of the company?

A: Budgeting is an important part of the business process. Without budgeting a business cannot track…

Q: How important of budgeting with saving?

A: Every organization creates a budget that helps them to determine the revenue as well as expenses…

Q: Requirements and Value of Budget Reporting and Auditing Explain the requirements for…

A: The practice of gathering and presenting financial data associated with a budget is known as budget…

Q: How is the operating budget of the master  budget used by management?

A: the master budget consists of all types of budget. operating budget is one of the budgets in the…

Q: Define static budget.

A: Budget is a estimation of revenue and expenses for a future period of time

Q: Define cash budget

A: A budget is a statement prepared to find out future incomes and expenditures. It is a plan prepared…

Q: How are standards and variances used in budgeting and budget analysis?

A: Variance refers to the difference between the standard values to the actual values for both revenue…

Q: How are specialized budgets prepared? What is the relationship of specialized budgets to the…

A: Budgets are the financial planning of a particular financial item like sales, income, expense, cash,…

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.