When you view your forecast on a business chart does

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Unformatted text preview: ts 100 units at $10 each for the month. In the second case, when the forecast is price x units, as soon as you know the price is going up, you also know that the resulting sales should also increase. Thinking of the forecast in components is easier. The illustration below shows the first part of a units-based sales forecast. It takes assumptions for sales in units, then the assumed average prices, and multiplies them to calculate sales dollar values. UNITS-BASED SALES FORECAST The sales forecast multiplies unit forecasts by per-unit prices to calculate projected sales. Cost of Sales Cost of sales, sometimes called Cost of Goods Sold (COGS) or direct costs, is traditionally the costs of materials and production of the goods a business sells. Cost of Sales or COGS belongs in accounting in the month in which the goods or services are actually sold, regardless of when they were purchased. For a manufacturing company this is materials, labor, and factory overhead. For a retail shop it would be what it pays to buy the goods that it sells to its customers. For service businesses, that don’t sell goods, the same concept is normally called “cost of sales,” which shouldn’t be confused with “sales and marketing expenses.” The cost of sales in this case is directly analogous to cost of goods sold. For a consulting company, for example, the cost of sales would be the remuneration paid to the consultants plus costs of research, photocopying, and production of reports and presentations. The illustration on the following page shows how a second part of the same forecast makes assumptions for unit costs and uses them, along with unit sales assumptions above, to calculate direct cost of sales. CHAPTER 11: FORECAST YOUR SALES 11.3 UNITS-BASED COSTS OF SALES The sales forecast multiplies unit forecasts by unit cost forecasts to calculate projected cost of sales. This example shows two months of a forecast that actually includes 12 months and then annual projections for a two-year period. The first year column totals the sales of the first 12 months. Graphics...
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This note was uploaded on 01/26/2014 for the course BUINESS 102 taught by Professor Unknown during the Winter '09 term at University of Phoenix.

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