PhotoMax, Inc., plans to prepare a sales budget schedule and a purchases budget schedule for 20X3. Management
Question:
PhotoMax, Inc., plans to prepare a sales budget schedule and a purchases budget schedule for 20X3. Management has set a sales goal of 250,000 units. After reviewing price trends, the sales manager projects that PhotoMax will need to increase its unit sales price from \($12.50\) to \($14.00\) in the first quarter.
The sales manager, after checking with the company’s merchandise suppliers, projects that the cost of merchandise will increase from \($7.00\) to \($7.50\) per unit in the first quarter of 20X3.
Quarterly unit sales for 20X2 are as follows:
After considering the time required to reorder merchandise, the sales manager requests that 30.0% of the next quarter's unit sales be available in the prior quarter’s ending inventory. Ending inventory for 20X2 is 27,700 units. Management projects that 65,000 units will be sold in the first quarter of 20X4.
Instructions:
1. Prepare a sales budget schedule (Schedule 1) for the four quarters ended December 31, 20X3. PhotoMax rounds unit amounts to the nearest hundred units, dollar amounts to the nearest \($10,\) and percentage amounts to the nearest 0.1%.
2. Prepare a purchases budget schedule (Schedule 2) for the four quarters ended December 31, 20X3.
Step by Step Answer:
