14.1 Sales Forecasts and Sales Budget

Question 1

A large manufacturer’s forecast of total sales revenues for a year is least likely to be influenced by

A. The seasonal pattern of sales revenues throughout the year
B. Input from sales personnel
C. Anticipated interest rates and unemployment rates
D. Expected shortages of key raw materials

Answer 1

A. The seasonal pattern of sales revenues throughout the year

A large manufacturing firm will be well familiar with the seasonal patterns to which demand for its products is subject. The forecast is being prepared for an entire year, so the cyclical effects of varying demand will be taken into account.

Question 2

When sales volume is seasonal in nature, certain items in the budget must be coordinated. The three most significant items to coordinate in budgeting seasonal sales volume are

A. Raw material inventory, work-in-process inventory, and production volume
B. Raw material inventory, direct labor hours, and manufacturing overhead costs
C. Production volume, finished goods inventory, and sales volume
D. Direct labor hours, work-in-process inventory, and sales volume

Answer 2

C. Production volume, finished goods inventory, and sales volume

Question 3

The budget that is usually the most difficult to forecast is the

A. Production budget
B. Manufacturing overhead budget
C. Expense budget
D. Sales budget

Answer 3

D. Sales budget

Sales budget is the most difficult to prepare because there are no internal figures to use as a guide. Sales are based on desires of consumers and the current business climate.

Question 4

Which of the following factors is least likely to influence the sales forecast of a company?

A. Government monetary policy
B. Pricing strategies of competitors
C. Product cost structure
D. Elasticity of product demand

Answer 4

C. Product cost structure

The cost structure of products has a direct impact on the forecast of costs, not sales.