Summer fun t-shirt shop has very seasonal sales for 2012

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Summer Fun T-shirt Shop has very seasonal sales. For 2012, 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 2012 are expected to be 10 percent higher than 2011 sales. Unit shirt sales by quarter for 2011 were as follows:

                                Childrens   Womens   Mens      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 fo $5 each, womens sell for $9, and mens sell for $10

Required

Assuming a 10 percent increase in sales, prepare a sales budget for each quarter of 2012 using the following:

A. Average quarterly sales (Hint: Winter quarter childrens shirts are 275 (1,000x1.10/4))

B. Actual quarterly sales. (Hint: Winter quarter childrens shirts are 220 (200x1.10))

C. Suggest advantages of each methos.

Reference no: EM13586592

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