Answer and Explanation:
a. The preparation of the sales budget is prepared below:-
<u>Sonic Inc.</u>
<u>Sales budget</u>
<u>Particulars </u>Unit Sales<u> Unit Selling price Total Sales
</u>
<u>Volume</u>
Model Rumble:
East Region 12,000 $60 $720,000
West Region 14,000 $60 $840,000
Total $1,560,000
Model Thunder:
East region 3,500 $90 $315,000
West region 4,000 $90 $360,000
Total $675,000
Total revenue from sales $2,235,000
To reach the total revenue from sales we simply added the total of model rumble with a total of model thunder.
b. The Preparation of the production budget is shown below:-
<u>Sonic Inc.</u>
<u>Production budget</u>
<u>Particulars </u> Units Model Units Model
<u> Rumble</u> <u>Thunder
</u>
Expected units to be
sold 26,000 7,500
(12,000 + 14,000) (3,500 + 4,000)
Add: Desired ending
inventory 500 250
Total units required 26,500 7,750
Less: Beginning inventory 750 300
Total units to be produced 25,750 7,450
So, to reach at total units to be produced we simply deduct the beginning inventory from total units required.
