Forecast Sales Volume and Sales Budget Guardian Framing Inc. prepared the following sales budget for the current year: Guardian Framing Inc. Sales Budget For the Year Ending December 31, 2014 Product and Area Unit Sales Volume Unit Selling Price Total Sales 8" Af— 10" Frame: East 28,800 $16 $460,800 Central 7,200 16 115,200 West 6,600 16 105,600 Total 42,600 $681,600 12" Af— 16" Frame: East 12,100 $31 $375,100 Central 3,000 31 93,000 West 2,100 31 65,100 Total 17,200 $533,200 Total revenue from sales $1,214,800 At the end of December 2014, the following unit sales data were reported for the year: Unit Sales 8" Af— 10" 12" Af— 16" East 30,528 12,947 Central 7,488 2,940 West 6,402 2,163 For the year ending December 31, 2015, unit sales are expected to follow the patterns established during the year ending December 31, 2014. The unit selling price for the 8" Af— 10" frame is expected to increase to $17 and the unit selling price for the 12" Af— 16" frame is expected to increase to $33, effective January 1, 2015. Required: Hint(s) 1. Compute the increase or decrease of actual unit sales for the year ended December 31, 2014, over budget. Use the minus sign to indicate a decrease in amount and percent. Round percents to the nearest whole percent. Unit Sales, Year Ended 2014 Increase (Decrease) Actual Over Budget Budget Actual Sales Difference Percent 8" Af— 10" Frame: East % Central % West % 12" Af— 16" Frame: East % Central % West % 2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 2015, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 2015. Use the minus sign to indicate a decrease in percent. Round budgeted units to the nearest whole unit. 2014 Actual Units Percentage Increase (Decrease) 2015 Budgeted Units (rounded) 8" Af— 10" Frame: East % Central % West % 12" Af— 16" Frame: East % Central % West % Hint(s) Hide 3. Prepare a sales budget for the year ending December 31, 2015. Guardian Framing Inc. Sales Budget For the Year Ending December 31, 2015 Product and Area Unit Sales Volume Unit Selling Price Total Sales 8" Af— 10" Frame: East $ $ Central West Total $ 12" Af— 16" Frame: East $ $ Central West Total $ Total revenue from sales $
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.
Forecast Sales Volume and Sales Budget
Guardian Framing Inc. prepared the following sales budget for the current year:
| Guardian
Framing Inc. Sales Budget For the Year Ending December 31, 2014 |
|||||||
| Product and Area | Unit
Sales Volume |
Unit
Selling Price |
Total Sales | ||||
| 8" Af— 10" Frame: | |||||||
| East | 28,800 | $16 | $460,800 | ||||
| Central | 7,200 | 16 | 115,200 | ||||
| West | 6,600 | 16 | 105,600 | ||||
| Total | 42,600 | $681,600 | |||||
| 12" Af— 16" Frame: | |||||||
| East | 12,100 | $31 | $375,100 | ||||
| Central | 3,000 | 31 | 93,000 | ||||
| West | 2,100 | 31 | 65,100 | ||||
| Total | 17,200 | $533,200 | |||||
| Total revenue from sales | $1,214,800 | ||||||
At the end of December 2014, the following unit sales data were reported for the year:
| Unit Sales | ||||
| 8" Af— 10" | 12" Af— 16" | |||
| East | 30,528 | 12,947 | ||
| Central | 7,488 | 2,940 | ||
| West | 6,402 | 2,163 | ||
For the year ending December 31, 2015, unit sales are expected to follow the patterns established during the year ending December 31, 2014. The unit selling price for the 8" Af— 10" frame is expected to increase to $17 and the unit selling price for the 12" Af— 16" frame is expected to increase to $33, effective January 1, 2015.
Required:
Hint(s)
1. Compute the increase or decrease of actual unit sales for the year ended December 31, 2014, over budget. Use the minus sign to indicate a decrease in amount and percent. Round percents to the nearest whole percent.
| Unit
Sales, Year Ended 2014 |
Increase
(Decrease) Actual Over Budget |
||||||
| Budget | Actual Sales | Difference | Percent | ||||
| 8" Af— 10" Frame: | |||||||
| East | % | ||||||
| Central | % | ||||||
| West | % | ||||||
| 12" Af— 16" Frame: | |||||||
| East | % | ||||||
| Central | % | ||||||
| West | % | ||||||
2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 2015, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 2015. Use the minus sign to indicate a decrease in percent. Round budgeted units to the nearest whole unit.
| 2014 Actual Units |
Percentage Increase (Decrease) |
2015 Budgeted Units (rounded) |
|||
| 8" Af— 10" Frame: | |||||
| East | % | ||||
| Central | % | ||||
| West | % | ||||
| 12" Af— 16" Frame: | |||||
| East | % | ||||
| Central | % | ||||
| West | % | ||||
Hint(s)
3. Prepare a sales budget for the year ending December 31, 2015.
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