Sales budgeting-definition

• process of allocating a portion of an organization's

resources for its various sales related activities for a
specified period of time.
•depends on the sales forecast expected revenue and
expenses
Budget Purposes

Planning
Co-ordination
Control
Feautures
It consists of three parts; break even,
target and projected sales.
The budget also includes sales by
product, location, customer density and
seasonal sales patterns.
It provides a plan for both cash and credit
sales.
Types of budgets prepared
Sales budget
Selling expenses budget
Administrative expenses budget
Methods of budgeting
affordabilitymethod
 percentage-of-sales method
competitive parity method
objective-and-task method
Budgetary procedure
Determining planning style-top down or
bottom up
Actual procedure
Each management level within the sales
department approves the budgets for
which it is responsible, incorporates them
into its own budget, and submits this
consolidated budget to the next higher
level for approval.
Continued…

Handling competition for available funds

within marketing division
Selling the sales budget to top management
Using the budget for control purposes
Effects of errors
expenses such as sales force commissions
vary directly with volume.
 expenses such as sales supervisory
expenses , are semi variable, fluctuating
with changes in volume but not directly.
If estimates unit sales volume is incorrect
by much , the usefulness of budgeted
selling expense figures as standards of
performance is impaired
Flexibility in budgeting
Budget should not be rigid
Full advantage of market oppurtunities
must be taken as they appear.
 If competitiors initiate actions not
foreseen at the budget making time, funds
must be allocated to counter act them.
 A realistic attitude towards the dynamic
nature of the market is a part of effective
sales budgeting.