Part B. Preparation of sales and puchase budget:

You are in the process of preparing budget for 20Y3 for Santa Fe Division. - Based on the forecasts of the Sales Department, the sales are expected to increase by 10 per cent in each quarter.

- The company's policy for computing the desired ending inventory in each quarter is: 12 per cent of the budgeted sales units of the same quarter plus 5,000 units.

You are required to: 1. Complete Budget assumption box in the Part B Data file Budget worksheet. (Follow the instructions in the notes/comment box in cells B2, B3 and B6.) 2. Prepare a Sales budget and Purchase budget for Santa Fe Division for 20Y3 (Use appropriate formula. Use Roundup function to calculate the number of units as a full unit in each row of the budget tables). Check figures: (Total budget sales: 612,612 units) (Total budgeted purchase: 619,296 units)

1 ASSUMPTIONS Product: Flexi suit Denver Revenue per unit $25 Total Variable Costs of Goods Sold $950,000 $1,620,000 Total Fixed Costs of Goods Sold $230,000 Total Variable Selling and Administration Expenses $140,000 $130 000 Total Fixed Selling and Administration Expenses $230,000 $300,000 Quarterly.r volume of units sold in the fourth quarter 20":"2 120,000 120,000 2 Projected Contribution Margin loosed Income Statement For Fourth quarter 2012 Sales $3,000,000 Total Variable costs $1,300,000 Contribution margin $1,200,000 Total Fixed costs $300,000 Net income $500,000 3 Calculate the followings: Variable Cost per unit Contribution Margin per unit Break Even units {use Roundup formula} . 30,000.00 Break Even sales {Break even units x Selling price per unit} $250,000 Margin of Safety.r percentage 25.00% Operating Leverage 1 Calculate the net income under the Conservative and Optimistic scenarios Sensitivit'u,f Analvis Conservative scenario: Sales decrease bv 30% than the projected sales Net Income under conservative scenario: Clptimistic scenario: Sales increase by 30% than the projected sales Net Income uncler optimistic scenario: $1,423,000 $1,260,000 .1: Budget Assumptions for Santa Fe Division Projected/Budgeted sales in unit for the fourth Quarter of 20Y2 The percentage of sales increase from one quarter to next quarter Desired Ending Inventory is 12% of the budgeted sales units of the same quarter plus 5,000 units Budgeted Ending inventory units for the fourth quarter of 20Y2Sales Budget for the 20Y3 1st quarter 2nd quarter 3rd quarter 4th quarter Total sale units Sales unitPurchase Budget for the 20Y3 1st quarter 2nd quarter 3rd quarter 4th quarter 20Y3 budgeted units Budgeted Sales unit Plus Desired Ending Inventory Equal to Total need Less Beginning inventory Equal to Budgeted Purchase