#sales budgeting #definition of sale budgeting #factors affecting sales budgeting #planning cycle of sales budgeting #companies sales budget

1. By- Grishma Chunekar

2. A Simple Definition of Budget
 It is an estimate of income and expenditure for
a set period of time.
 Budgeting is simply balancing your expenses
with your income.
 Budgeting is important for any business.
 Without a budget companies can't track
process or improve performance.

3. Sales Budgeting
• A sales budget is management's estimate of sales for a future
financial period.
• A business uses sales budgets to set department goals, estimate
earnings and forecast production requirements.
• A company must know how many products it will sell and how
much revenue will be generated before it can determine
purchasing budgets, manufacturing budgets, and capital
expenditure budgets.
• As every other budget is based on the sales budget. The sales
budget is therefore called as the starting point for the master
budget.

4. Factors Affecting Sales Budget
• Managers examine internal and external factors when
creating a sales budget.
• Management carefully analyses economic conditions,
market competition, production capacity, and selling
expenses when developing the sales budget. All of these
factors play an important role in the company's
future performance.
• Management often utilizes employees in various
departments to help with the sales and revenue
estimates. –Eg. Sales Dept.

5. Planning Cycle of Sales Budgeting

6. Planning of Sales Budget
• Sales budgets are often divided into first,
second, third and fourth fiscal quarter
estimates.
• The critical components of a sales budget are
estimated unit sales, price per unit and the
allowance for discounts and returns.
• Estimated unit sales multiplied by the price
per unit equals budgeted gross sales.
• Budgeted gross sales less estimated sales
discounts and returns is the budgeted net
sales for the period.

7. Quarter 1 Quarter 2 Quarter 3 Quarter 4
Forecasted unit sales 5,500 6,000 7,000 8,000
x Price per unit $10 $10 $11 $11
Total gross sales $55,000 $60,000 $77,000 $88,000
- Sales discounts & allowances $1,100 $1,200 $1,540 $1,760
= Total net sales $53,900 $58,800 $75,460 $86,240
• The increased demand in the second half of the year will allow it to
increase its unit price from Rs. 10 to Rs. 11.
• Also the company's historical sales discounts and allowances
percentage of two percent of gross sales will continue through the
budget period.
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Forecasted unit sales 5,500 6,000 7,000 8,000
x Price per unit (Rs.) 10 10 11 11
Total gross sales (Rs.) 55,000 60,000 77,000 88,000
- Sales discounts &
allowances @2% (Rs.)
1,100 1,200 1,540 1,760
= Total net sales (Rs.)
53,900 58,800 75,460 86,240
ABC Company's Sales Budget

8. Thank You