Sales Budget Summer Fun T-Shirt Shop has very seasonal sales. For 2017, 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 2017 are expected to be 10 percent higher than 2013 sales. Unit shirt sales by quarter for 2016 were as follows:

Sales Budget Summer Fun T-Shirt Shop has very seasonal sales. For 2017, 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 2017 are expected to be 10 percent higher than 2013 sales. Unit shirt sales by quarter for 2016 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 Children's T-shirts sell for $8 each, women's sell for $12, and men's sell for $13. Assuming a 8 percent increase in sales, prepare a sales budget for each quarter of 2017 using the following: a. Average quarterly sales. (Hint: Winter quarter children's shirts are 270 [1,000 X 1.08/4].) Summer Fun T-Shirt Shop Sales Budget (Average) Quarterly for 2017 Quarter Winter Spring Summer Fall Year Totals Units: Children's 0 0 0 0 0 Women's 0 0 0 0 0 Men's 0 0 0 0 0 Dollars: Children's $ 0 $ 0 $ 0 $ 0 $ 0 Children's T-shirts sell for $8 each, women's sell for $12, and men's sell for $13. Assuming a 8 percent increase in sales, prepare a sales budget for each quarter of 2017 using the following: a. Average quarterly sales. (Hint: Winter quarter children's shirts are 270 [1,000 X 1.08/4].) Year Totals Summer Fun T-Shirt Shop Sales Budget (Average) Quarterly for 2017 Quarter Winter Spring Summer Fall Units: Children's 0 0 Women's 0 0 0 Men's 0 0 Dollars: Children's $ 0 $ 0 $ 0 $ Women's 0 0 0 Men's 0 0 0 Totals $ 0 $ 0 $ 0 $ 0 0 0 0 0 $ 0 0 0 $ 0 b. Actual quarterly sales. (Hint: Winter quarter children's shirts are 216 [200 X 1.08].) Year Totals Summer Fun T-Shirt Shop Sales Budget (Average) Quarterly for 2017 Quarter Winter Spring Summer Fall Units: Children's 0 0 0 Women's 0 0 0 Men's 0 0 0 Dollars: Children's $ 0 $ 0 $ 0 $ Women's 0 0 0 Men's 0 0 0 Totals $ 0 $ 0 $ 0 $ 0 0 0 OOC 0 $ 0 0 0 $ 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