Sales Budget 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:

	Children's	Women's	Men's	Total
Winter quarter	200	200	100	500
Spring quarter	200	250	200	650
Summer quarter	400	300	200	900
Fall quarter	200	250	100	550
Total	1,000	1,000	600	2,600

Childrens T-shirts sell for $6 each, womens sell for $10, and mens sell for $11.

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 childrens shirts are 275 [1,000 X 1.10/4].)

	Summer Fun T-Shirt Shop Sales Budget Quarterly for 2014
	Winter	Spring	Summer	Fall	Year Totals
Units:
Children's	Answer	Answer	Answer	Answer	Answer
Women's	Answer	Answer	Answer	Answer	Answer
Men's	Answer	Answer	Answer	Answer	Answer
Dollars:
Children's	Answer	Answer	Answer	Answer	Answer
Women's	Answer	Answer	Answer	Answer	Answer
Men's	Answer	Answer	Answer	Answer	Answer
Totals	Answer	Answer	Answer	Answer	Answer

b. Actual quarterly sales. (Hint: Winter quarter childrens shirts are 220 [200 X 1.10].)

	Summer Fun T-Shirt Shop Sales Budget Quarterly for 2014
	Winter	Spring	Summer	Fall	Year Totals
Units:
Children's	Answer	Answer	Answer	Answer	Answer
Women's	Answer	Answer	Answer	Answer	Answer
Men's	Answer	Answer	Answer	Answer	Answer
Dollars:
Children's	Answer	Answer	Answer	Answer	Answer
Women's	Answer	Answer	Answer	Answer	Answer
Men's	Answer	Answer	Answer	Answer	Answer
Totals	Answer	Answer	Answer	Answer	Answer

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

Smoothes the investment in inventory throughout the year

Simplifies the purchasing of inventory