The Sales Budget must be prepared first as it affects all the other budgets. In order to prepare the sales budget an estimate of the expected number of units to be sold and the expected sales price needs to be determined. To prepare the sales budget we used the following assumptions. Statistics for tourism in Hawaii are available from the www.hawaiitourismauthority.org and the Department of Business, Economic Development and Tourism of the State of Hawaii ( Hawaii.gov/debdt ). Number of visitors to the island from January 2007 to May 2007 were 125,000, 125,000, 150,000, 125,000 and 125,000, respectively. (For simplicity, we assume each visitor, on average, purchases one milk shake. (Students can get more elaborate and research the average number of days visitors stay and the average number of couples, versus families with kids). The sales mix and the sales price will be consistent with the first part of the case at 40% small and 60% large with the sales price set at the competitors price of $10 for large and $7 for small (less the resort fee of 10%). SALES BUDGET for 1st qtr January 125,000 February 125,000 March 150,000 1stqtr Total April 125,000 May 125,000 Large shakes expected to be sold: (visitors.60) 75,000 75,000 90,000 400,000 75,000 75,000 Expected sales price ($1090%) Total sales ($) Small shakes expected to be sold: (visitors * .40) Expected sales price ($7*90%) Total sales ($) TOTAL SALES

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Sales Budget must be prepared first as it affects all the other budgets. In order to prepare the sales budget an estimate of the expected number of units to be sold and the expected sales price needs to be determined. To prepare the sales budget we used the following assumptions. Statistics for tourism in Hawaii are available from the www.hawaiitourismauthority.org and the Department of Business, Economic Development and Tourism of the State of Hawaii ( Hawaii.gov/debdt ).

Number of visitors to the island from January 2007 to May 2007 were 125,000, 125,000, 150,000, 125,000 and 125,000, respectively. (For simplicity, we assume each visitor, on average, purchases one milk shake. (Students can get more elaborate and research the average number of days visitors stay and the average number of couples, versus families with kids).

The sales mix and the sales price will be consistent with the first part of the case at 40% small and 60% large with the sales price set at the competitors price of $10 for large and $7 for small (less the resort fee of 10%).

SALES BUDGET for 1^stqtr	January 125,000	February 125,000	March 150,000	1^stqtr Total	April 125,000	May 125,000
Large shakes expected to be sold: (visitors*.60)	75,000	75,000	90,000	400,000	75,000	75,000
Expected sales price ($10*90%)
Total sales ($)

Small shakes expected to be sold: (visitors * .40)
Expected sales price ($7*90%)
Total sales ($)
TOTAL SALES