EXXIM is a manufacturer company that produce cushion. The relevant daTa perraining its sales and production budget are as follows:
Total sales for 2018 are expected 1,500,000 units. Quarterly sales are 25%. 20%, 30% and 25% respectively. The sales price is expected to be RM42.50 per unit for the first two quarters and RM75 per unit beginning in the third quarter. Sales in first quarter of 2019 are expected to be 10% higher than the budgeted sale volume in the first quarter 2018.
Management desires to maintain ending finished goods inventories at 25% of the next quarter's budgeted sales volume.
You are required to prepare a sales land producion budget by quarters for 2018.
To prepare the sales and production budget for EXXIM in 2018, we will follow the given data and guidelines.
1. Calculate Quarterly Sales:
- Total sales for 2018: 1,500,000 units
- Quarterly sales percentages: Q1-25%, Q2-20%, Q3-30%, Q4-25%
To find the sales volume for each quarter, multiply the total sales by the respective percentage for each quarter.
Q1 Sales Volume = 1,500,000 units * 25% = 375,000 units
Q2 Sales Volume = 1,500,000 units * 20% = 300,000 units
Q3 Sales Volume = 1,500,000 units * 30% = 450,000 units
Q4 Sales Volume = 1,500,000 units * 25% = 375,000 units
2. Determine Sales Price:
- Sales price for the first two quarters: RM42.50 per unit
- Sales price starting from the third quarter: RM75 per unit
3. Calculate Sales Revenue:
Multiply the sales volume for each quarter by the respective sales price.
Q1 Sales Revenue = Q1 Sales Volume * Q1 Sales Price
Q2 Sales Revenue = Q2 Sales Volume * Q2 Sales Price
Q3 Sales Revenue = Q3 Sales Volume * Q3 Sales Price
Q4 Sales Revenue = Q4 Sales Volume * Q4 Sales Price
4. Calculate Sales in Q1 2019:
- Sales in Q1 2019 are expected to be 10% higher than the budgeted sales volume in Q1 2018.
To find the sales volume in Q1 2019, add 10% to the Q1 2018 sales volume.
Q1 2018 Sales Volume = 375,000 units
Q1 2019 Sales Volume = Q1 2018 Sales Volume + (Q1 2018 Sales Volume * 10%)
Now, using the above calculations and given data, you can prepare the sales and production budget by quarters for 2018.