Forecast Sales Volume And Sales Budget For Raphael Frame Com

Forecast Sales Volume and Sales Budget Raphael Frame Company prepared

Raphael Frame Company prepared the following sales budget for the current year: At the end of December 2014, the following unit sales data were reported for the year: For the year ending December 31, 2015, unit sales are expected to follow the patterns established during the year ending December 31, 2014. The unit selling price for the 8" à— 10" frame is expected to increase to $17 and the unit selling price for the 12" à— 16" frame is expected to increase to $32, effective January 1, 2015.

Required: 1. Compute the increase or decrease of actual unit sales for the year ended December 31, 2014, over budget.

Paper For Above instruction

The task involves analyzing past unit sales data to determine the variance between actual and budgeted sales for Raphael Frame Company for the year ending December 31, 2014. This comparison provides insights into sales performance and market trends, which are essential for accurate forecasting and strategic planning.

Analysis of Actual vs. Budgeted Sales for 2014

Firstly, to evaluate the increase or decrease in actual unit sales compared to the budgeted figures, we need the specific data on the number of units sold in each region (East, Central, West) for the year ending December 31, 2014. Typically, this data includes the number of units planned (budgeted) and the actual units sold. Since the provided information in the prompt is limited, assumed data or hypothetical figures are necessary for calculation purposes.

For illustrative purposes, suppose the budgeted units for each region and their actual sales are as follows:

  • 8"–10" Frame: East: Budgeted = 10,000 units; Actual = 9,500 units.
  • Central: Budgeted = 8,000 units; Actual = 8,500 units.
  • West: Budgeted = 12,000 units; Actual = 11,500 units.
  • 12"–16" Frame: East: Budgeted = 6,000 units; Actual = 6,200 units.
  • Central: Budgeted = 5,000 units; Actual = 4,800 units.
  • West: Budgeted = 7,000 units; Actual = 7,300 units.

Using these data points, the changes are calculated as:

  • 8"–10" Frame: East: 9,500 – 10,000 = -500 units (decrease)
  • Central: 8,500 – 8,000 = +500 units (increase)
  • West: 11,500 – 12,000 = -500 units (decrease)
  • 12"–16" Frame: East: 6,200 – 6,000 = +200 units (increase)
  • Central: 4,800 – 5,000 = -200 units (decrease)
  • West: 7,300 – 7,000 = +300 units (increase)

The percentage change for each region and product category is computed as:

Percentage Change = (Actual – Budget) / Budget * 100%

For example, for the East 8"-10" frame:

Percentage Change = (-500 / 10,000) * 100% = -5%

Similarly, these calculations are performed for all regions and categories to determine the overall trend in unit sales performance.

2. Estimating 2015 Unit Sales Based on 2014 Trends

Assuming that the increase or decrease observed in 2014 continues into 2015, the projected unit sales for 2015 are calculated by applying these percentage changes to the 2014 budgeted units. The forecasted units are rounded to the nearest whole number for practicality in planning.

Using the previous illustrative percentages:

  • 8"–10" Frame: East: 10,000 units * (1 - 0.05) = 9,500 units
  • Central: 8,000 units * (1 + 0.0625) = 8,500 units
  • West: 12,000 units * (1 - 0.0417) ≈ 11,500 units
  • 12"–16" Frame: East: 6,000 units * (1 + 0.0333) ≈ 6,200 units
  • Central: 5,000 units * (1 - 0.04) = 4,800 units
  • West: 7,000 units * (1 + 0.0429) ≈ 7,300 units

These projected figures serve as the basis for the 2015 sales budget, providing realistic expectations aligned with historical sales performance.

3. Preparing the 2015 Sales Budget

The sales budget consolidates projected sales volume and forecasted sales revenue. For each product and area, multiply the estimated units by the new unit selling prices, which are $17 for the 8"–10" frame and $32 for the 12"–16" frame, effective from January 1, 2015.

For example, the total sales revenue for the East 8"–10" frame in 2015 is:

9,500 units * $17 = $161,500.

Similarly, for the West and Central regions across both frame sizes, compute total sales and aggregate to find overall revenue.

The final sales budget inclusively summarizes all regions and products, presenting total units sold and total anticipated revenue for 2015.

In conclusion, thorough analysis of historical variances, combined with strategic projections based on percentage trends, enables effective sales planning. Accurate forecasting facilitates resource allocation, inventory management, and revenue estimation, ensuring the company's sales strategy is aligned with past performance and future expectations.

References

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  • Drury, C. (2013). Management and Cost Accounting. Cengage Learning.
  • Hilton, R. W., & Platt, D. E. (2013). Managerial Accounting: Creating Value in a Dynamic Business Environment. McGraw-Hill Education.
  • Kaplan, R. S., & Atkinson, A. A. (2015). Advanced Management Accounting. Pearson.
  • Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2013). Introduction to Management Accounting. Pearson.
  • Anthony, R. N., & Govindarajan, V. (2014). Management Control Systems. McGraw-Hill Education.
  • Wheeler, D. (2014). Accounting for Managers. Cengage Learning.
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  • Drury, C. (2013). Management and Cost Accounting. Cengage Learning.

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