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.