Importance of Sales Budget-Free-Samples-Myassignmenthelp.com

Question: Discuss about the basic Sales Budget and the Factors that need to be Considered in the Preparation of a Sales Budget. Answer: Introduction Sales Budget is forecasting of sales. It is the estimation of the management for sales revenue for a period known as budget period. It is a budget, which is prepared by focusing on two factors namely sale price and the quantity of sales. The report will discuss about the factors crucial in setting up a sales budget in the later part. Discussion A Sales Budget provides the management with the foundation upon which the functional budgets are prepared and is coordinated with the production function plans[1]. It defines the expected quantities that would be sold along with the values at which such sales would be made. The following factors are needed to be taken into account when setting a sales budget: Past Sales: The management of the company would be required to evaluate its past sales and that of the rival firms for the geographical areas covered by them. Changes in Demands and Market Share: The Management needs to analyze the impact of the changes in the Customer Demands and the effect of such change in its market share and its effect on the competitors of the firm[2]. Sales of Uncovered Geographical Areas: The management has to assess the sales it can make in the areas not covered by them, for this it has to assess the sales effected by the competitors in such geographical areas. For Industrial Products: The management needs to assess the pattern of sales within the industry it belongs. It needs to understand the consumer behavior for assessing such pattern of sale. Comparison of Sales: The management has to evaluate the pattern of sales of each different geographical area with the other areas covered by them. This would help them understand the markets that needs more attention[3]. The following information are used in the determination of a sales budget: The sales achieved by the firm in past for each of the regions covered by them. The overall situation of the economy and the market in which the company exists. The margin of profits of each different products, which is expected to be sold by them at the expected value. The management has to assess the plans and the policies in respect of various activities like market research, pricing, sales promotion and so on[4]. The Level of Competition in the market in which the company exists. The management has to ensure that the sales budget they are preparing is achievable by its production capacity. The management also has to take into consideration the entry of new or substitute products in the market. Conclusion Thus, Sales Budget can be said to be the starting point of entire Budgeting procedure. It is an estimation of goods that can be sold at a given estimated price. With the help of this estimate the management can assess the level of profits that would be achieved which would eventually help them decide upon the plans for the firm. References Crosson, Susan V., and Belverd E. Needles.Managerial accounting. Cengage Learning, 2013. DRURY, COLIN M.Management and cost accounting. Springer, 2013. Hawkins, Anne.Managing budgets pocketbook. Management Pocketbooks, 2015. Hofstede, Geert H., ed.The game of budget control. Routledge, 201 Hofstede, Geert H., ed.The game of budget control. Routledge, 2012 DRURY, COLIN M.Management and cost accounting. Springer, 2013. Hawkins, Anne.Managing budgets pocketbook. Management Pocketbooks, 2015. Crosson, Susan V., and Belverd E. Needles.Managerial accounting. Cengage Learning, 2013.