book 5 theme 2 Flashcards
what is sales forecasting?
sales forecasts predict future revenues based on past sales figures
what are some things that sales forecasting does?
forecast profit/loss
help construct cash flow forecasts
3 factors which affect sales forecasts
consumer trends
external factors
actions of competitors
difficulties when it comes to sales forecasts
just because something happened in the past does not mean it will happen in the future.
what is extrapolation?
involves using past data trends to predict what is going to happen in the future.
what is sales volume?
number of units sold
what is sales revenue + the calculation?
total value of units sold
price * quantity
what are fixed costs?
costs which DO NOT vary with output
e.g. rent, salaries, interest payments, utility
what are variable costs?
costs that DO vary directly with output
e.g. raw materials, packaging, wages (if performance related)
what is break even?
the point at which enough sales have been made to cover costs
what is the break even calculation?
total contribution per unit
how do you calculate contribution per unit?
selling price - variable costs per unit
what is contribution?
what a business needs to achieve from sales in order to cover fixed costs and then make a profit
total contribution calculation?
total revenues - total variable costs
contribution per unit?
selling price - variable costs per unit
