Sales Budget

Sales Budget

Sales budget: The most important techniques for forecasting sales

Sales budget:

The sales budget is the starting point in preparing the planning budget.

It is a quantitative and quantitative statement that shows the value of the products expected to be sold during the budget period, classified on a geographic or time basis, or both.

Budget Management Course (10 MCQs)

Sales forecasting techniques:

Demand and sales forecasting are measured according to several different methods, including:

1- The historical method

According to this method, sales of previous periods are analyzed and their trends are studied in order to determine the expected sales during the coming period.

For example, it may be clear to the firm that the actual sales for each year exceed the previous year by 20%. In this case, the firm assumes that the sales of the next year are equivalent to the sales of the current year + 20%

2- Using a survey form:

The form is sent to:

  • Salesmen: to determine their estimates based on what has been sold.
  • Users of the commodity: to know the amount of demand for the commodity

3- The method of indicators:

The Sales of some industries are linked to some indicators related to the national economy, for example:

  • Sales of baby food is related to the number of births
  • Sales of cars and other appliances are related to the national product and personal income
  • The number of students at the secondary level and the demand for small cars.

4- Using statistical and mathematical methods:

It includes many methods, including: simple averages, weighted averages, and time series analysis.

Planning budget for production:

It is a list that includes the quantity of production units expected to be sold during the period (the budget period) to meet the estimated sales and the inventory.

The production budget depends on the sales planning budget, after adjusting it to the levels of the first and last full stock of the period, according to the following equation:

Expected Production Quantity = Expected Sales Quantity + Ending Inventory – Beginning Inventory

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