Business 2.2.1 Flashcards
(16 cards)
What do sales forecasts do?
Predict future revenues based on past sale figures
What do sales forecasts focus on to predict this?
The volume and value of sales
The size of the market
Sales as a result of promotional activity
Sales as a result of cyclical factors
What resource requirements do sales forecasts predict?
How many staff will be needed?
How much stock will be required?
Does capacity need to be expanded (or reduced)?
Does the equipment need to be upgraded, replaced or increased (or reduced)?
How much and which type of finance will be required?
Is promotional activity (e.g. advertising) required - and when?
What are some factors affecting sales foreasts
Consumer trends
Economic cycle
Actions of competitors
What are the main difficulties of sales forecasting?
Interpretation
Too much data
Future doesnt always mirror past
Sales volume?
Number of units sold
Sales revenue
Value of units sold
What is the formula for contribution?
Sellingprice per unit - variable cost per unit
What is the break even point?
Where total costs is equal to total revenue
What is the forumula for break even?
Fixed costs/contribution
What are the limitations of break even analysis
Less useful when has to calculate multiple porducts
Quality of data has to be high
Assumes that all output is sold
What is a budget
a financial plan that estimates the income and expenditure
Purpose of a budget
PLanning
control
motivation
coordonation
evaluation
What are the two tpes of budget
historical figure budgets (based on historical data)
zero based budgeting (all spending is justifieed)
What are the two types of variance analysis?
favourable variance (actual figure is better than budget)
adverse budget(actual figure is worse than budget)
What are the difficulties of budget
unacheivable budgets can have negative effects of motivation
budgets are costly
data has to be correct
can encourage managers to focus on short term
