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
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
