Question

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	30,765		15,688
Central	7,519		3,920
West	6,499		2,884

Raphael Frame Company Sales Budget For the Year Ending December 31, 20Y6
Product and Area		Unit Sales Volume		Unit Selling Price		Total Sales
8" × 10" Frame:
East		29,300		$33		$966,900
Central		7,300		33		240,900
West		6,700		33		221,100
Total		43,300				$1,428,900
12" × 16" Frame:
East		14,800		$34		$503,200
Central		4,000		34		136,000
West		2,800		34		95,200
Total		21,600				$734,400
Total revenue from sales						$2,163,300

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 $34 and the unit selling price for the 12" × 16" frame is expected to increase to $36, effective January 1, 20Y7.

Required:

1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y6, 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 20Y6				Increase (Decrease) Actual Over Budget
		Budget		Actual Sales		Amount	Percent
8" × 10" Frame:
	East						%
	Central						%
	West						%
12" × 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 20Y7, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y7. Use the minus sign to indicate a decrease in percent. Round budgeted units to the nearest whole unit.

		20Y6 Actual Units		Percentage Increase (Decrease)	20Y7 Budgeted Units (rounded)
8" × 10" Frame:
	East			%
	Central			%
	West			%
12" × 16" Frame:
	East			%
	Central			%
	West			%

Feedback

To calculate the difference subtract budget from actual sales.

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

Raphael Frame Company
Sales Budget
For the Year Ending December 31, 20Y7
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
8" × 10" Frame:
East		$	$
Central
West
Total			$
12" × 16" Frame:
East		$	$
Central
West
Total			$
Total revenue from sales			$

Answer 1

1
			Increase (Decrease)
Unit Sales,			Actual Over Budget
Year Ended 2016
		Budget	Actual Sales	Amount	Percent
8" × 10" Frame:
	East	29300	30,765	1,465	5%
	Central	7300	7,519	219	3%
	West	6700	6,499	-201	-3%
12" × 16" Frame:
	East	14800	15688	888	6%
	Central	4000	3920	-80	-2%
	West	2800	2884	84	3%

2
	Actual Units	Percentage increase( decrease)	Budgeted units
8" × 10" Frame:
East	30,765	5%	32303
Central	7,519	3%	7745
West	6,499	-3%	6304
12" × 16" Frame:
East	15688	6%	16629
Central	3920	-2%	3842
West	2884	3%	2971

Sales Budget
	Unit sales	Unit selling price	Total Sales
East	32303	34	1098311
Central	7745	34	263315
West	6304	34	214337
Total	46352		1575963
12" × 16" Frame:
East	16629	36	598654
Central	3842	36	138298
West	2971	36	106939
Total	23441		843890
Total Revenue from sales			2419853