First quarter 23,000 units
Second quarter 28,000 units
Third quarter 27,000 units
Fourth quarter 32,000 units
Sales increase each quarter during 2018
20%
Selling price per lock 25$
Required
Prepare a sales budget by quarter for 2018.
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
Sales in units for 2017
Projected sales at 120%
of prior year
Sales price per unit
Budgeted revenue for 2018
What-if?
Consider the following after you have completed the requirements of E10-4.
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
Sales in units for 2017
Projected sales at 105%
of prior quarter
Sales price per unit
Budgeted revenue for 2018
Exercise 10-4 Sales Budget
Locksafe Company manufactures burglar-resistant commercial door locks. Recently, the company
began selling locks on the Web, and the company expects sales to increase dramatically compared
with the prior year. For the past year, 2017, unit sales were as follows:
Assume that sales for each quarter in 2018 will be 20 percent higher than in 2017 and that the selling
price will be as follows:
Suppose that the sales manager for Locksafe Company provided a separate estimate for sales
during 2018. He forecasts that sales will be 33,000 units in the first quarter of 2018, and will increase
5 percent each subsequent quarter. Prepare a new sales budget by quarter for 2018 that reflects the
new forecast.
Problem data follow:
Sales data for 2017:
First quarter 23,000 units
Second quarter 28,000 units
Third quarter 27,000 units
Fourth quarter 32,000 units
Sales increase each quarter during 2018
20%
Selling price per lock 25$
Required
Prepare a sales budget by quarter for 2018.
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
What-if?
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
Solution: Exercise 10-4 Sales Budget
Roehler Industrial has estimated that production for the next five quarters will be:
45,000 units
41,000 units
49,000 units
38,000 units
47,000 units
Material purchase and requirements for production follow:
Pounds of raw material required per unit 6
Raw material cost per pound 7.00$
Raw material on hand, beginning of first quarter, 2017 283,500$
Roehler desires to have materials on hand at the end of each quarter based on the following:
Percentage of next quarter’s material requirements 15%
Required
Prepare quarterly direct materials purchases budgets for Roehler Industries for 2017.
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Year
Units to be produced
Cost of raw material per unit
Cost of raw material needed
for production
Add desired ending inventory
of raw material
Total material needed
Less beginning inventory of
raw material
Required raw material purchases
Exercise 10-7 Direct Materials Purchases Budget
Problem data follows:
Estimated production:
45,000 units
41,000 units
49,000 units
38,000 units
47,000 units
Pounds of raw material required per unit 6
Raw material cost per pound 7.00$
Raw material on hand, beginning of first quarter, 2017 283,500$
Percentage of next quarter’s material requirements 15%
Required
Prepare quarterly direct materials purchases budgets for Roehler Industries for 2017.
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Year
Solution: Exercise 10-7 Direct Materials Purchases Budget