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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

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.

1.

To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

To Compute: The increase or decrease of actual unit sales for the year ended December 31, 20Y6, over budget.

Explanation

The following table shows the increase or decrease of actual unit sales.

Details Unit sales, Year Ended 20Y6 Increase (Decrease) Actual Over Budget
Budget Actual Amount ($) Percent (%)
(A) (B) (C) = (B) – (A) (D) = (C)/(A) × 100
8” × 10” Frame:
      East

2.

To determine

To Compute: The unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y7.

3.

To determine

To Prepare: The sales budget for the year ending December 31, 20Y7.

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