The sales forecast is the cornerstone for budgeting. Explain why
Homework Answers
The product produced by a firm has to be sold to the customers. Hence Sales forms the main basis for budgeting exercise. Sales budget is drawn up first in Master budget. Production budget is derived from sales budget based on inventory levels. The production budget is then used to calculate material requirement and material purchase budget, direct labor cost budget and manufacturing overhead budget.
Sales budget is used as cornerstone due to following reasons
- · It helps in producing products which are required by consumers in market
- · It reduces unnecessary build up of inventory levels in the manufacturing system
- · It helps in allocation of resources like materials and labor to required production only
Explain the significance of the sales or revenue forecast to effective budgeting. What strategies might you...
Explain the significance of the sales or revenue forecast to effective budgeting. What strategies might you employ to insure that sales or revenue forecasts are properly constructed to support the budget process?
why is the sales budget considered the cornerstone of the master budget?
why is the sales budget considered the cornerstone of the master budget?
Critical Sales Forecast Why is the sales forecast so important in short-term financial planning? How does...
Critical Sales Forecast Why is the sales forecast so important in short-term financial planning? How does it affect the key areas in a whole organization? Which area do you think is most affected by the sales forecast? Why?
5.1 Explain the process of capital budgeting. (3) 5.2 Why is the process of capital budgeting...
5.1 Explain the process of capital budgeting. (3) 5.2 Why is the process of capital budgeting necessary? (2)
Explain why it is important to understand that capital budgeting is subject to the validity of...
Explain why it is important to understand that capital budgeting is subject to the validity of the forecasted data. Additionally, explain whether this reduces the reliability of these types of tools. Are there any other alternatives, or are these tools some of the most reliable that currently exist?
explain why it is important to understand that capital budgeting is subject to the validity of...
explain why it is important to understand that capital budgeting is subject to the validity of the forecasted data. Additionally, explain whether this reduces the reliability of these types of tools. Are there any other alternatives, or are these tools some of the most reliable that currently exist? Also need the source
How do you think both small and large organizations can benefit from budgeting? How would you...
How do you think both small and large organizations can benefit from budgeting? How would you explain the role of a sales forecast; and how would you explain the difference between a sales forecast and sales budget?
Explain the practical problems encountered in using a sales response criterion for budgeting and evaluation purposes.
Explain the practical problems encountered in using a sales response criterion for budgeting and evaluation purposes.
Explain in detail why corporation engage in capital budgeting, present the pros and cons of the...
Explain in detail why corporation engage in capital budgeting, present the pros and cons of the various methods and point out the selection criteria.
10. Which of the following is the recommended approach to forecast COGS, and why? a) Forecast...
10. Which of the following is the recommended approach to forecast COGS, and why? a) Forecast COGS based on revenue growth, since it provides flexibility in the model. b) Forecasting COGS based on the forecast ratio of COGS to sales allows for possible improvements in COGS relative to sales. c) Forecast COGS based on revenue growth since COGS and revenues have a direct relationship. d) Forecasting COGS based on inventory is recommended because inventory prices and COGS are correlated.
10. Which of the following is the recommended approach to forecast COGS, and why? a) Forecast COGS based on revenue growth, since it provides flexibility in the model. b) Forecasting COGS based on the forecast ratio of COGS to sales allows for possible improvements in COGS relative to sales. c) Forecast COGS based on revenue growth since COGS and revenues have a direct relationship. d) Forecasting COGS based on inventory is recommended because inventory prices and COGS are correlated.
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