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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

 Sentinel Systems Inc. prepared the following sales budget for 20Y8:

Sentinel Systems Inc.

Sales Budget For the Year Ending December 31, 20 Y8

  Unit Sales Unit Selling Total
Product and Area Volume Price Sales
Home Alert System:      
United States 1,700 $200 $ 340,000
Europe 580 200 116,000
Asia 450 200 90,000
Total 2,730   $ 546,000
Business Alert System:      
United States 980 $750 $ 735,000
Europe 350 750 262,500
Asia 240 750 180,000
Total 1,570   $1,177,500
Total revenue from sales     $1,723,500

  At the end of December 20Y8, the following unit sales data were reported for the year:

    Unit Sales
Home Alert System Business Alert System
United States 1,734 1,078
Europe 609 329
Asia 432 252

 For the year ending December 31, 20Y9, unit sales are expected to follow the pat­terns established during the year ending December 31, 20Y8. The unit selling price for the Home Alert System is expected to increase to $250, and the unit selling price for the Business Alert System is expected to be decreased to $820, effective January 1, 20Y9.

  Instructions

  1. 1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y8, over budget. Place your answers in a columnar table with the following format:
  Unit Sales, Year Ended 20Y8 Increase (Decrease) Actual Over Budget
  Budget Actual Sales Amount Percent
Home Alert System:
United States    
Europe    
Asia    
Business Alert System:
United States    
Europe    
Asia    
  1. 2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 20Y9, compute the unit sales volume to lie used for preparing the sales budget for the year ending December 31, 20Y9- 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.

20Y8 Actual Units

Percentage Increase (Decrease) 20Y9 Budgeted Units (rounded)
  1. 3. Prepare a sales budget for the year ending December 31, 20Y9.

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, 20Y8, over budget.

Explanation

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

Details Unit sales, Year Ended 20Y8 Increase (Decrease) Actual Over Budget
Budget Actual Amount ($) Percent (%)
(A) (B) (C) = (B) – (A) (D) = (C)/(A) × 100
Home Alert System

2.

To determine

To Compute: The unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y9.

3.

To determine

To Prepare: The sales budget for the year ending December 31, 20Y9.

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