Summary Sales Forecasting, Sales Revenue & Costs

Theme 2 Topic 9
Sales Forecasting, Sales Revenue & Costs
Sales Revenue
Sales Revenue – all the money received from selling the products and services before costs are deducted

 Price x Number of Items Sold

Sales revenue can also be described as:

 Income
 Total revenue
 Sales turnover or turnover
 Sales
 Revenue

A Firm Seeking to Increase its Revenue Can:

1) Change the price of their product
2) Sell more products

However, if costs also increase the business won’t make more of a profit



Sales Volume
Sales Volume – the number of products or services a business sells

 Sales Revenue
Selling Price



Sales Forecast
Sales Forecasting – accurately estimating sales revenue for the future

The Purpose of Sales Forecasts: Factors Affecting Sales Forecasts:
 Plan ahead  Seasonal demand
 Know how many products will need to sell  Competition
 To keep track of inflows/outflows  Economy/interest rates
 To predict demand
 Makes a business more likely to get a loan

Difficulties of Sales Forecasting:
 Forecasts are not guaranteed
 Businesses operating in dynamic markets will find it significantly more difficult to forecast
accurately beyond a very short period of time in the future


Costs
Fixed Costs – costs that DO NOT vary directly with output in the short-run, e.g. rent, salaries, administrative
costs

 Not affected in the short term by small changes in output
 In the long term, fixed costs will change if the level of output increases significantly