Question

Identify advantages of using average quarterly sales when preparing a sales budget and the advantages of using actual quarterly sales when preparing a sales budget.

Answer 1

Average quarterly sales:

1) Average quarterly sales gives an idea of monthly sales performance of an entity in a consolidated manner.

2) It does not show loss of a particular month since the profits of other months shall cover such losses.

3) It is a powerful comparitive tool for projections etc.

4) Total turnover can be found by simply multipling the average sales with 3 months.

Actual Quarterly Sales:

1) It shows the total turnover of the entity in a detailed manner.

2) It helps in budgeting purpose and gives a wider picture of the entity.

3) It helps to compare quarterly reports.