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A company uses rolling budgeting and has a sales budget as follows :
Quarter Sales
Q1. $125750
Q2. $132,038
Q3. $138,640
Q4. $145,572
Total. 542,000Actual sales for the quarter1 were $123,450. The adverse variance is fully explained by competition being intensed than expected and growth being lower than anticipated . The budget committee has proposed that the revised assumption for sales growth should be 3% per quarter .
Update the budget as appropriate.Working answer :
The revised budget should incorporated 3% growth starting from the actual sales figure of Q1 and should include a figure for Quater 1 of the following year.
Sales Q2 $127,154 Q3 $130,969 Q4 $134,945 Q1$138,945 Total = $ 531966.Please, can you in detail work out how do the book get the figures in Q3, Q4 and Q1.
I already knew Q2 $123,450 * 1.03 = $127,154.. but the rest I don’t know .Thanks in advance .
Since they are budgeting on sales growing by 3% each quarter, then Q3 sales will be Q2 x 1.03 (127,154 x 1.03 = 130,969)
Q4 sales will be Q3 sales x 1.03 (130,969 x 1.03 = 134,898)
Q1 sales will be Q4 sales x 1.03 (134,898 x 1.03 = 138,945)
Either you have mistyped the answer for Q4, or there is a typing mistake in your book.
Yes sir, I mistyped answer for Q4 . You are very correct sir .
Thank you very much and you are always the best !
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