Forecast Sales Volume and Sales Budget Guardian Framing Inc. prepared the follow

Question

Forecast Sales Volume and Sales Budget

Guardian Framing Inc. prepared the following sales budget for 2016:

At the end of December 2016, the following unit sales data were reported for the year:

For the year ending December 31, 2017, unit sales are expected to follow the patterns established during the year ending December 31, 2016. The unit selling price for the 8" × 10" frame is expected to increase to $24 and the unit selling price for the 12" × 16" frame is expected to increase to $26, effective January 1, 2017.

Required:

1. Compute the increase or decrease of actual unit sales for the year ended December 31, 2016, over budget. Use the minus sign to indicate a decrease in amount and percent. Round percents to the nearest whole percent.

2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 2017, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 2017. Use the minus sign to indicate a decrease in percent. Round budgeted units to the nearest whole unit.

Guardian Framing Inc.
Sales Budget
For the Year Ending December 31, 2016 Product and Area Unit Sales
Volume Unit Selling
Price Total Sales 8" × 10" Frame: East 18,800 $23 $432,400 Central 4,900 23 112,700 West 4,500 23 103,500 Total 28,200 $648,600 12" × 16" Frame: East 12,500 $24 $300,000 Central 2,900 24 69,600 West 1,900 24 45,600 Total 17,300 $415,200 Total revenue from sales $1,063,800

Explanation / Answer

Answer 1. Unit Sales Year Ended 2016 Increase (Decrease) Actual over Budget Budget Actual Unit Percent 8" X 10" Frame: East            18,800               19,364                         564 3% Central               4,900                 4,949                           49 1% West               4,500                 4,320                       (180) -4% 12" X 16" Frame: East            12,500               13,000                         500 4% Central               2,900                 2,842                         (58) -2% West               1,900                 1,938                           38 2% Answer 2. 2016 Actual Units Percentage Increase (Decrease) 2017 Budgeted Units (rounded) 8" X 10" Frame: East            19,364 3%                   19,945 Central               4,949 1%                     4,998 West               4,320 -4%                     4,147 12" X 16" Frame: East            13,000 4%                   13,520 Central               2,842 -2%                     2,785 West               1,938 2%                     1,977

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