Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built-in hard drive; they can be put into fanny packs for use while working out. It is now early January, and Audio-2-Go’s budgeting team is finalizing the sales budget for this year. Sales in units and dollars for last year were as follows: Model Number Sold Price Revenue A-1 23,000 $ 50 $1,150,000 A-2 38,000 85
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.
Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built-in hard drive; they can be put into fanny packs for use while working out. It is now early January, and Audio-2-Go’s budgeting team is finalizing the sales budget for this year. Sales in units and dollars for last year were as follows:
| Model | Number Sold | Price | Revenue | |||
| A-1 | 23,000 | $ 50 | $1,150,000 | |||
| A-2 | 38,000 | 85 | 3,230,000 | |||
| A-3 | 55,000 | 100 | 5,500,000 | |||
| A-4 | 13,000 | 120 | 1,560,000 | |||
| A-5 | 4,500 | 220 | 990,000 | |||
| $12,430,000 |
In looking over the last year's sales figures, Audio-2-Go’s sales budgeting team recalled the following:
- Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 30 percent. The number of units of Model A-1 to be sold was
forecast to be 50 percent of last year's units. - Model A-5 was introduced on November 1 of last year. It contains a built-in 20 GB hard drive and can be synchronized with several popular music software programs. Audio-2-Go brought out this model to match competitors’ audio players, but the price is so much higher than other Audio-2-Go products, that sales have been disappointing. The company plans to discontinue this model on June 30 of this year, and thinks that monthly sales will remain at last year's level if the sales price remains unchanged.
- Audio-2-Go plans to introduce Model A-6 on July 1 of this year. It will be a high-end player that will be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is $175; unit sales are estimated to equal 3,000 per month.
- A competitor has announced plans to introduce an improved version of Model A-3. Audio-2-Go believes that the Model A-3 price must be cut 15 percent to maintain unit sales at last year's level.
- It was assumed that unit sales of all other models would increase by 10 percent, prices remaining constant.
Required:
Prepare a sales forecast by product and in total for Audio-2-Go, Inc., for this year.
Audio-2-Go, Inc.Sales BudgetFor This Year
| Model | Units | Price | Total Sales |
| A-1 | fill in the blank 1 | $fill in the blank 2 | $fill in the blank 3 |
| A-2 | fill in the blank 4 | fill in the blank 5 | fill in the blank 6 |
| A-3 | fill in the blank 7 | fill in the blank 8 | fill in the blank 9 |
| A-4 | fill in the blank 10 | fill in the blank 11 | fill in the blank 12 |
| A-5 | fill in the blank 13 | fill in the blank 14 | fill in the blank 15 |
| A-6 | fill in the blank 16 | fill in the blank 17 | fill in the blank 18 |
| Total | $fill in the blank 19 |
Step by step
Solved in 2 steps
