2.2 financial planning

Question 1

sales forecasting

Answer 1

predicting future sales volumes/ values to inform key decisions

Question 2

factors affecting sales forecasts

Answer 2

consumer trends
economic variables
actions of competitors

Question 3

what economic variables affect sales forecasting

Answer 3

economy growth
interest rates
inflation
unemployment
exchange rates

Question 4

how do actions of competitors affect sales forecasting

Answer 4

one business failing increases sales of another
competitor launches a rival product decreasing sales
marketing campaign with celebs may reduce market share

Question 5

advantages of sales forecasting

Answer 5

helps with purchase of raw materials, promotions and staffing

Question 6

disadvantages of sales forecasting

Answer 6

data may not be accurate
consumer trends are volatile
economic trends are volatile

Question 7

what is sales volume

Answer 7

number of units sold by a business

Question 8

what is sales revenue

Answer 8

value of units sold by a business - must be identified to get profit value (sales rev - cost)

Question 9

what are fixed costs

Answer 9

costs that do not change - rent, insurance

Question 10

what are variable costs

Answer 10

costs that change according to output - raw material costs, wages of workers

Question 11

total cost

Answer 11

fixed costs + total variable costs

Question 12

total variable cost

Answer 12

variable cost x quantity