From the course: Accounting Foundations: Budgeting

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Factors to consider in your sales budget

Factors to consider in your sales budget

From the course: Accounting Foundations: Budgeting

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Factors to consider in your sales budget

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- The first step in developing a master budget is to prepare a sales budget. All other budgets are developed from this sales budget. Projecting accurate sales is very difficult however, because sales are a function of both uncontrollable external variables, such as customer tastes, and economic conditions, and controllable internal variables, such as price, sales effort, and advertising expenditures. Now those uncontrollable external factors driving sales include the following. First, there's the business environment, which includes current government policies and law, the status of the economy, demographics, which are a characteristic of the population, such as age, wealth, family status, and so forth. And then there's the state of technology. Another external factor is customer needs and tastes with respect to the product or service being analyzed, as well as other substitute products. Another factor, intensity of the competition and possible barriers to market entry that can…

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