BUDGETARY CONTROL NOTES

BUDGETARY CONTROL NOTES

QUESTION: How sales forecast is different from a sales budget? Elucidate the importance of accurate sales forecast for effective budgeting?

ANSWER:

SALES FORECAST: Sales forecast may be just a guess of sales without taking into consideration production capacity and may lack any objective to control the actual performance.

SALES BUDGET: Sales budget includes the sales estimate made on the basis of plant capacity, availability of material, labor and working capital and many other considerations. Sales budget is capable of being achieved, being so it is amenable to control.

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