Page 411 - Business Principles and Management

Unit 5

usually projected for sales territories, types of customers (government, industrial,
consumer), sales representatives, geographic areas, or product categories. Sales
managers responsible for the various categories (territories, customers, products)
make independent estimates for the sales and expenses of their unit. The top sales
manager uses those estimates to prepare a final sales budget. Sometimes man-
agers prepare sales estimates with the idea of developing quotas or goals for sales
representatives and territories. These estimates provide a goal for the sales depart-
ment as well as a basis for preparing related budgets such as merchandising,
advertising, or cash and operating budgets.
Figure 15-4 shows sales estimates determined in two different ways for the
same company. Because the two sets of estimated figures are not the same, some-
one must combine them into one satisfactory estimate that the sales department
can follow.

FIGURE 15-4 Two Ways of Forecasting Sales

Budget Based on Analysis of Sales Representatives
SALES REPRESENTATIVE YEAR 1 SALES YEAR 2 SALES
(ACTUAL) (ESTIMATE)
T. A. Nader $ 356,720 $ 380,000

H. E. Loch 348,380 360,000

C. D. Heidel 471,240 440,000

J. H. Sharmon 442,940 440,000

C. F. Powell 426,980 440,000

J. G. Dunbar 408,360 400,000

Total $2,454,620 $2,460,000

Budget Based on Analysis of Products
PRODUCT YEAR 1 SALES YEAR 2 SALES
(ACTUAL) (ESTIMATE)
Washers $ 642,840 $ 680,000

Dryers 202,320 200,000

Ranges 189,260 180,000

Lamps 209,360 200,000

Refrigerators 1,210,840 1,300,000

Total $2,454,620 $2,560,000

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