Chapter 22, Problem 22.1APR

Forecast sales volume and sales budget

 For 20Y6, Raphael Frame Company prepared the sales budget that follows.

 At the end of December 20Y6, the following unit sales data were reported for the year:

	Unit Sales
	8" × 10" Frame	12" × 16" Frame
East	8,755	3,686
Central	6,510	3,090
West	12,348	5,616

Raphael Frame Company Sales Budget For the Year Ending December 31, 20Y6
	Unit Sales	Unit Selling	Total
Product and Area	Volume	Price	Sales
8"×10" Frame:
East	8,500	$16	$136,000
Central	6,200	16	99,200
West	12,600	16	201,600
Total	27,300		$436,800
12" x 16" Frame:
East	3,800	$30	5114,000
Central	3,000	30	90,000
West	5,400	30	162,000
Total	12,200		$366,000
Total revenue from sales			$802,800

  For the year ending December 31, 20Y7, unit sales are expected to follow the patterns established during the year ending December 31, 20Y6. The unit selling price for the 8" ×10"frame is expected to increase to $17, and the unit selling price for the 12" ×16" frame is expected to increase to $32, effective January 1, 20Y7.

  Instructions

1. 1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y6, over budget. Place your answers in a columnar table with the following format:

	Unit Sales, Year Ended 20Y6	Increase (Decrease) Actual Over Budget
	Budget Actual Sales	Amount Percent
8" ×10" Frame:
East
Central
West
12"×16" Frame:
East
Central
West

1. 2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 20Y7, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y7. Place your answers in a columnar table similar to that in part (1) but with the following column heads. Round budgeted units to the nearest unit.

20Y6	Percentage	20Y7
Actual	Increase	Budgeted
Units	(Decrease!	Units (rounded)

1. 3. Prepare a sales budget for the year ending December 31, 20Y7.