Please comment on my classmate Rinalds response to the DQ question

Please comment on my classmate Rinald’s response to the DQ question

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Hello Rinald,

Interesting post.

I conquer with you that a sales budget is the most crucial step of laying the foundation of the business. However, I would like to add that a sales budget expression occurs in terms of the units of production and selling price in monetary terms. The sales budget aids in prediction of the amount of capital for business and the cash flow needed to sustain a smooth running of the business. Indeed, a sales budget is a prerequisite in sales quotas assignments to various segments of the business sales. The level of accuracy attained in the sales budget affects the entire budgeting process of the business. As such, inaccuracies in the preparation of the sales budget lead to jeopardizing of the rest of the budgeting process. In addition, a sales budget leads to the preparation of the production budget and manufacturing budget. These two budgets aid in cost identification and projection, inventory preparations, identification of production means, and the purchases needed (George 2008, pp12-18).

On sales revenue, it is indeed true that the income received from business operations in a given trading period constitutes sales revenue. However, projected sales revenue should aid in cost prediction for the business. In situations in which the cost predictions exceed the projected sales revenue, there is a need of cutting on the costs in order to attain a profit. Moreover, sales revenue plays a significant role in forecasting expenses and capital expenditure (George 2008, 43). However, since sales revenue may receive impacts from dynamics in the economy and loss of customers, there is a need of including these factors while forecasting sales revenue for a business.

Best Regards.

Bibliography.

George, H, 2008, An introduction to Corporate Budgeting. London: Routledge.