2.2.1 Sales Forecasting

Question 1

Define sales forecasts?

Answer 1

estimation of future sales based on previous sales, surveys or trends

Question 2

3 purposes of a sale forecast?

Answer 2

• identifying trends and patterns
• firms can plan production in advance and make sure they have sufficient inventory to cope with demand
• compare to other figures

Question 3

Factors affecting sales forecasts? (3)

Answer 3

Consumer trends
Economic variables
Actions of competitors

Question 4

3 difficulties with sales forecasting?

Answer 4

assumes circumstances and influences are the same as last
doesn’t take into account external shocks
accuracy for sales forecasts is difficult longterm

Question 5

3 things that sales forecasting can determine?

Answer 5

Budgets
Cash flow forecasts
Profit and loss accounts

Question 6

What is the purpose of a variance?

Answer 6

provide budget-holders and management with feedback on performance of firm