Expect that the sales budget may reflect different volumes and prices than was forecast in the sales forecast
economics
Description
1. The sales budget provides both the unit sales volume of each good or service and the unit price. There are good reasons for needing both data elements. Some managers may be more concerned with the quantities sold rather than with sales dollars.
>A production manager is concerned with the number of budgeted units to be sold, in order to budget how many units to make, and has no use for sales prices or sales dollars, per se.
Would you expect that the sales budget may reflect different volumes and prices than was forecasted in the sales forecast? What would be be doing differently during the sales budget process than while creating a sales forecast snapshot?
Why do you think that is? Now consider that many of you keep a house hold budget. If you run into the same problems with that, then you know the answers as to why.
2. When doing your sales budget, how can you gauge potential changes in quantity purchased from your existing customers? What changes can you expect from new customers? Can you look at history to see when you get net new clients? Launching a new product would be a more obvious event, right?
3. We're told that in a 2011 Hackett Group study, that the accuracy of revenue and profit forecasting were very high. However, the forecasting for cash flow was the least accurate.
For those of you wondering, the Hackett Group is a global consulting company that performs data analysis for various industries.
