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Statistical techniques

The need for forecasting

1.1 What is it?

The purpose of forecasting in the budgeting process is to establish realistic
assumptions for planning. Forecasts might also be prepared on a regular basis for
the purpose of feedforward control reporting.

Forecasts may be needed in the following areas of budgeting:

 the volume of output and sales

 sales revenue (sales volume and sales prices)

 costs.

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