LO.2 (Sales budget) Pataky Co.’s sales manager estimates that 2,000,000 units of
product RI#698 will be sold in 2011. Th e product’s selling price is expected to decline
as the result of technology changes during the year and estimates of the sales price are
as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
$17 $16 $14 $12
In talking with customers, the sales department discovered that sales quantities per
quarter could vary substantially. Th us, the sales manager has prepared the following
three sets of quarterly sales projections:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Scenario A 600,000 300,000 640,000 460,000 2,000,000
Scenario B 400,000 700,000 250,000 650,000 2,000,000
Scenario C 530,000 480,000 800,000 190,000 2,000,000
If Pataky’s sales department is able to infl uence customers, which of the potential sales
scenarios would be most profi table for the company? Would that scenario possibly
cause the company any diffi culties?