Question

Stillwater Designs produces two subwoofers: S12L7 and S12L5. The S12L7 sells for $660, and the S12L5 sells for $417. Projected sales (number of speakers) for the coming five quarters are as follows:

	S12L7	S12L5
First quarter, 20X1	800	1,300
Second quarter, 20X1	2,200	1,400
Third quarter, 20X1	5,600	5,300
Fourth quarter, 20X1	4,600	3,900
First quarter, 20X2	900	1,200

Sales Budget for Year Ended in December 31 20X1

S12L7	1st Qtr	2nd QTR	3rd QTR	4th Qtr	Year
Units
Price
Sales
S12L5
Units
Price
Sales
Total Sales

How will Stillwater Designs use this sales budget?

1. Stillwater Designs will use the sales budget in planning as the basis for the production budget.

2. The company can also compare actual sales against the budget to see if expectations were achieved.

3. Both 1 and 2

4. None of the above

Answer 1

Sales Budget for Year Ended in December 31 20X1

S12L7	1st Qtr	2nd QTR	3rd QTR	4th Qtr	Year
Units	800	2200	5600	4600	2011
Price	660	660	660	660	2011
Sales	528000	1452000	3696000	3036000	2011
S12L5
Units	1300	1400	5300	3900	2011
Price	417	417	417	417
Sales	542100	583800	2210100	1626300
Total Sales	1070100	2035800	5906100	4662300

Stillwater Designs uses this sales budget in planning as the basis for the production budget as well as used in comparing the actual sales against the budget

So both 1 and 2