Determine important factors while praparing sales budget, Managerial Accounting

Determine important factors while praparing sales budget

The possible factors to be taken into account while preparing a sales budget are discussed as follows:

1) Past sales figures and trend: the record of previous experience from the most reliable guide as to future sales as the past performance is related to actual business condition. However the other factors such as seasonal fluctuation growth of market trade cycle etc., should not be lost sight of.

2) Salesmen' estimates: salesmen etc., are in a place to estimate the potential demand of the customers more accurately because they come in direct contact with them. However proper discount should be made for over optimistic or too conservative estimates of the salesmen depending upon their temperament.

3) Plant capacity: it should be the endeavor of the business to ensure proper utilization of plant facility and that the sales budget provides an economic and balance production in the factory.

4) General trade prospects: the general trade prospects considerably affect the sales. Valuable information can be gathered in this connection from trade papers and magazines.

5) Orders in hand: in case of industries where production is a quite in this respect. Though efforts should be made to reduce the effects of seasonal influence on the amount of sales.

6) Seasonal fluctuations: past experience will be the best guide in this respect. However efforts should be made to minimize the effects of seasonal fluctuation by providing special concession or off season discounts therefore increasing the volume of sales.

7) Potential market: market research should be carried out for ascertaining the potential market for the company products. Such an estimate is made on the basis of expected population growth purchase power of consumers and buying habits of the people.

8) Availability of material and supply: adequate supply of raw materials and other supplies must be ensured before drafting the sales programmer.

9) Financial aspect: Expansions of sales usually require increase in capital outlay also therefore sales budget must be kept within the bounds of financial capacity.

10) Other factors:

The nature and degree of competition within the industry

Cost of distributing goods

Government controls rules and regulation related to the industry

Political situation national and international

 

Posted Date: 7/8/2013 5:23:31 AM | Location : United States







Related Discussions:- Determine important factors while praparing sales budget, Assignment Help, Ask Question on Determine important factors while praparing sales budget, Get Answer, Expert's Help, Determine important factors while praparing sales budget Discussions

Write discussion on Determine important factors while praparing sales budget
Your posts are moderated
Related Questions
VALUE ADDED STATEMENTS Are intended to show how much wealth or value has been created by the company’s operations and how the wealth has been shared out to interested groups e.

Change of Technology: Changes in technology commonly leads to improvements in the efficient processing of raw material, reduce in wastages, more speedy production and higher produ

No further banks were the sole source of funds for working capital requires of the business sector. At current more finance options are obtainable to a Finance Manager to allow smo

Financial manager's role in inventory management The techniques of inventory management are very useful in determining the optimum level of inventory and finding answers to the

Selling product for 31.00 and Variable expenses are 26.00. In order to cover the fixed expenses 31,500 hats must be sold what is the Total fixed cost in dollars?

what is Long term budgets Long term budgets: The budgets are prepared to depict long term planning of the business. The period of long term begets various between five to ten

Production As you would suspect, effectively directing an organization needs prudent management of production. Because this is a hands-on process, and often entails dealing wit

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

After determining the amount of working capital as in above, a specific amount say 5 percent or 10 percent may be added to cover contingencies. This is to be noted that facts depen

what are characteristics of relevant cost?