Part $2-$ Budget

$3-$Year Average Sales per month

Canyon

Sierra

Terrain

Acadia

Savana

Yukon

January

$20$

$18$

$19$

$17$

$12$

$8$

February

$15$

$7$

$9$

$11$

$11$

$11$

March

$13$

$7$

$9$

$10$

$10$

$11$

April

$16$

$6$

$7$

$9$

$7$

$12$

May

$15$

$5$

$6$

$8$

$7$

$12$

June

$12$

$5$

$6$

$7$

$6$

$8$

July

$6$

$5$

$5$

$7$

$7$

$9$

August

$4$

$4$

$8$

$6$

$9$

$8$

September

$3$

$6$

$5$

$5$

$7$

$7$

October

$5$

$5$

$6$

$7$

$6$

$8$

November

$5$

$9$

$10$

$10$

$10$

$9$

December

$19$

$13$

$16$

$13$

$14$

$11$

Yates Motors prepare sales budgets on a product line Basis. To create reliable sales budgets, the dealership uses two main planning assumptions $(4$ marks$)$

Future sales can be reasonably predicted based on the three year average of the types of GMC vehicles that are sold at the dealership.

An prediction of changes in customer activity and economic assessments can be used to determine how sales levels will change over the coming year

Due to the economic recovery and the recent growth in vehicle sales, Yates Motors is expecting a $10\%$ increase in vehicle sales across all models next year.

Pricing and commission rates are expected to be as follows:

Canyon

Sierra

Terrain

Acadia

Savanna

Yukon

Sales Price

$23935$

$26260$

$27465$

$37945$

$38790$

$49290$

Dealer$$s Commission per Vehicle

$2000$

$2150$

$2575$

$3000$

$3125$

$3890$

Salesman Commission per Vehicle

$220$

$236\mathrm{.}50$

$283\mathrm{.}25$

$330$

$343\mathrm{.}75$

$427\mathrm{.}90$

Questions:

Based on the information provided, prepare:

Monthly Product Line sales budget for next year showing total sales $(6$ marks$)$

A monthly budget showing commission earned by the dealership for next year $(6$ marks$)$

A monthly budget showing the commission the dealership needs to pay to its sales people per month next year. $(6$ marks$)$

Expected gross profit per month for the next year $(6$ marks$)$

Is there anything that could be wrong with the planning assumptions used to create the sales budget? Discuss the weaknesses of each assumption and what you would do to improve those weaknesses. $(4$ marks$)$PART $2-$ BUDGET

$3-$Year Average Sales per month

Yates Motors prepare sales budgets on a product line Basis. To create reliable sales budgets, the dealership uses two main

planning assumptions $(4$ marks$)$

a$.$ Future sales can be reasonably predicted based on the three year average of the types of GMC vehicles that are sold at the

dealership.

b$.$ An prediction of changes in customer activity and economic assessments can be used to determine how sales levels will

change over the coming year

Due to the economic recovery and the recent growth in vehicle sales, Yates Motors is expecting a $10\%$ increase in vehicle sales

across all models next year.

Pricing and commission rates are expected to be as follows: