Marketing

How is sales revenue forecast? Using your Portfolio Project topic, demonstrate how your sales revenue and your break-even point are calculated

ANSWER

How is sales revenue forecast?

Sales revenue can be forecasted by checking the previous year figures and multiply it with the growth rate. This can be done by applying the following formula C7*(1+D5). This can be used to generate figures in the future about sales. Also, this can be done also by focusing on; start revenue and not revenue, checking the fixed costs/overhead, check on variable costs and forecast the revenue using both aggressive and conservative case. Check on the gross margin and operating profit margin (Currie & Rowley, 2010).

Sales revenue

Sales revenue is the amount of money that is brought into the business in order to generate profits in a given period of time. Calculating sales revenue involves understanding the quantity of product sold. If the sales goes down, this can affect all the aspect of the company. To calculate sales revenue, it can be done by taking the number of a product sold multiplied by the number of sales amount of the item.

Sales revenue= units sold X sales price

Break-Even Point

When an investment starts to generate a positive cash flow, this is considered to be a break-even point. Therefore, the break-even point dictates how much is being generated. To calculate the break-even point can be done by subtracting variable costs from sales per unit then the outcome divided to fixed costs. The number of units that needs to be sold are the breakeven in order to cover all the expenses. This can be calculated by the use of the following formula

Break-even units=fixed costs/sales per unit – variable costs

References

Currie, C. S., & Rowley, I. T. (2010). Consumer behavior and sales forecast accuracy: What’s going on and how should revenue managers respond?. Journal of Revenue and Pricing Management, 9(4), 374-376.