Question 4: Dhofar Company manufactures two products M1 and Z1. Its sales department has three divisions: Salalah, Raysut and Mirbat.

Initial estimates for the sales budgets for the year ending 31 December 2021 which are based on the assessments of the divisional executives are as follows;

Product M1 : Salalah 45,000 units: Raysut 110,000 units and Mirbat: 25,000 units

Product Z1: Salalah 70,000 units: Raysut 82,000 units and Mirbat:0

Sales Prices: M1: 3 OMR and Z1= 4 OMR in all areas.

Arrangements are made for the extensive advertising of product M1 and Z1 and it is estimated that Salalah division sales will increase by 30,000 units. Arrangements are also made to advertise and distribute product z1 in the Mirbat area in the second half of 2021 when sales are expected to be 100,000 units.

Since the estimated sales of the Raysut division represented an unsatisfactory target, it is agreed to increase both the estimates by 15 %.

Prepare a sales budget for the year to 31 December 2021.