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It is most sensible to start with the sales budget and develop the other budget from...

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ibello | Student, Undergraduate | Honors

Posted April 29, 2012 at 5:49 AM via web

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It is most sensible to start with the sales budget and develop the other budget from there. Analyse the validity of this statement.

Do you agree with the statement? Justify your answer. 

How should sales revenues be considered when determining other costs?

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dano7744 | College Teacher | (Level 2) Educator

Posted May 21, 2012 at 9:21 PM (Answer #1)

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I believe your statement is a very valid one. A common mistake in businesses of all types is to underestimate the sales budget. Underestimation can reek havoc on the enterprise because gaining new customers will be adversely affected. The sales department of any organization is paramount in order to bring in new business and service existing accounts. You can not short change the organization by low balling the sales budget. New businesses often fall short in this area by not allocating the necessary resources to the sales department. After the sales budget is established other expenses can be examined.

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