Question

When creating the sales budget, management simply takes the sales from the year before and divides that total by 12 months. Thus, each month will always predict the same amount of budgeted sales. T/F?

Answer 1

The statement is False. Sales budgeting involves considering various factors to determine budgeted sales.

Step-by-step explanation:

The statement is False. When creating a sales budget, management typically takes various factors into account, including historical sales data, market conditions, customer behavior, and sales projections. Simply dividing the total sales from the previous year by 12 does not account for potential fluctuations and changes in sales patterns throughout the year.

For example, in the electronics retailer regression model mentioned in the reference, the sales predictions are based on a specific formula that takes into account the day of the year. This demonstrates the need for a more comprehensive approach to sales budgeting.