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?
Benefits of Budgeting for both Small and Large organizations:
1. Budget Helps in planning all the economic activities of a business.
2. All the Departments of the business unit Coordinate and cooperate in the preparation of the budget.
3. Budget helps in planning, Coordination and Control.
4. A budget is prepared on the basis of the past experiences.
5. It acts as a barometer.
6. Budgets are usually updated, controlled and corrected everytime when situations change
7. Budgets are Quantified plans. It motivates employees to attain goals and improves overall performance
8.Deviations from Budget plans are ascertained and corrective steps are taken
9. Budgets are a Yardstick to the actual performance.
Role of Sales Forecasts
1. An Accurate Sales Forecast helps to chalk out a realistic Budget.
2. It acts as communicative instrument to other departments
3. Foundation for periodic planning & Control.
4. It covers a limited function.
5. Sales forecasts is a start up for the production department and gear up for the Sales and Marketing Department
Difference between Sales Forecasts & Sales Budget
Sales forecasts is the Starting point of the Budgeting. It relates to probable events likely to happen under anticipated conditions. It estimates the Quantity to be sold for each product. Past sales volume are taken as the starting point. It is the projection or an estimates of the available customer demand. It reflects the environmental or Competitive situation facing the company. It does not connote any sense of control.
These figures are revised based on the Following factors:
(a) Expected Industry and General Economic conditions
(b) Competition in the market
(c) Findings and Conclusions of the Market Research Studies
(d) Planned Advertising and Promotion.
Sales Budget indicates the Quantity Sold at the expected Selling price per unit. It relates to planned policy or programme.Sales Budget is rather active than Passive. It shows how the management reacts to the environmental and competition. It is a Planning and control document which helps the management to accomplish their goals. It is a tool of control. The process of budget starts where forecasts ends
How do you think both small and large organizations can benefit from budgeting? How would you...
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