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Why is the sales forecast the starting point in budgeting?

Why is the sales forecast the starting point in budgeting?

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Answer #1

Why is the sales forecast the starting point in budgeting?

Sales forecasting serves as the staring point for all activities of the firm and gives direction to all activities. It helps the firm to decide which produces are to be continued, which ones are to be dropped, which one are to be added and which need modification.

* It enables the firm to identify its precise position in the market, this is turn , facilitates optimum utilization of resources, optimum penetration of markets, and the optimum gains from market opportunities.

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