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Sales Budget Honolulu Shirt Shop has very seasonal sales. Assume that for next year 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 next year are expected to be 5% higher than current year sales. Unit shirt sales by quarter for this year were as follows: Children's Women's Men's Total Winter quarter 80 80 140 300 Spring quarter 180 120 160 460 Summer quarter 500 600 260 1,360 Fall quarter 120 160 160 440 Total 880 960 720 2,560 Childrens T-shirts sell for $10 each, womens sell for $15, and mens sell for $18. Assuming a 5% increase in sales, prepare a sales budget for each quarter of the year using the following: a. Average quarterly sales. (Hint: Winter quarter childrens shirts are 231 [880 X 1.05/4].) Honolulu Shirt Shop Sales Budget Quarterly - Upcoming Year Winter Spring Summer Fall Year Totals Units: Children's Answer 80 Answer 189 Answer 525 Answer 126 Answer 0 Women's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Men's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Dollars: Children's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Women's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Men's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Totals Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 b. Actual quarterly sales. (Hint: Winter quarter childrens shirts are 84 [80 X 1.05].) Honolulu Shirt Shop Sales Budget Quarterly - Upcoming Year Winter Spring Summer Fall Year Totals Units: Children's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Women's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Men's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Dollars: Children's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Women's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Men's Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Totals Answer 0 Answer 0 Answer 0 Answer 0 Answer 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

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