Question Partially correct Mark 4.37 out of 10.00 Sales Budget Flag question Edit question Summer Fun T-Shirt Shop has very seasonal sales. For 2014, management is trying to decide whether to establish a sales budget based on average sales or on sales estimated by quarter. The unit sales for 2014 are expected to be 10 percent higher than 2013 sales. Unit shirt sales by quarter for 2013 were as follows: Winter quarter Children's Women's Men's Total 200 200 100 500 Spring quarter 200 250 200 650 Summer quarter 400 300 200 900 Fall quarter 200 Total 1,000 250 100 550 1,000 600 2,600 Children's T-shirts sell for $10 each, women's sell for $14, and men's sell for $15. Assuming a 10 percent increase in sales, prepare a sales budget for each quarter of 2014 using the following: a. Average quarterly sales. (Hint: Winter quarter children's shirts are 275 [1,000 X 1.10/4].) Summer Fun T-Shirt Shop Sales Budget Quarterly for 2014 Spring Summer Fall Year Totals Winter Units: Children's 275 275 275 Women's 275 275 275 275 275 1,100 1,100 Men's 165 165 - 165 165 660 Dollars: Children's $ Women's 2,475 * $ 3,575 x Men's Totals 2,310 x 2,475 x $ 3,575 x 2.310 x $ 8,360 x $ 8,360 $ 2,475 x $ 3,575 x 2.310x 8.360 x $ 2,475 x $ 3,575 x 2,310 x 9,900 x 14,300 x 9,240 x 8,360 $ 33,440 x b. Actual quarterly sales. (Hint: Winter quarter children's shirts are 220 [200 X 1.10].) Summer Fun T-Shirt Shop Winter Sales Budget Quarterly for 2014 Spring Summer Fall Year Totals Units: Children's Women's Men's Dollars: Children's $ Women's 220 220- 220 440 220 1,100 110 275 220- 330 275 1,100 220 110 660 1,980 x $ 2,860 x Men's 1,540 x Totals $ 6,380 x $ 1,980 x $ 3,575 x 3,080 x 8,635 x 5 3,960 x $ 4,290 x 3,080 x 11,330 x $ 1,980 x $ 3,575 x 1,540 x 9,900 x 14.300 x 9,240 x 7,095 x $ 33,440 x c. Suggest advantages of each method. Which one is not an advantage to preparing a sales budget using average quarterly sales. Reduces the possibility of being out of stock in most quarters Minimizes the investment in inventory during low-sales quarters