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14.5 Different Types of Budgets > 14.5.4 Functional Budgets

14.5.4 Functional budgets

Budgets that relate to the individual functions of an organization are known as functional budgets. The various types of functional budgets to be prepared for a business vary according to the size and nature of the business. Some important functional budgets are discussed in Sections 14.5.4.1 through 14.5.4.6.

14.5.4.1 Sales budget

Sales budget is an estimate of future sales, often broken down into both units and dollars. It is used to create company sales goals.

The process of budgeting starts with sales forecasting. It is the forecasting of sales for a period in terms of both quantity and value. It is prepared by the sales manager. Such a forecast requires an assessment of the number of units of each product that can be sold, sales territories to be covered and prices at which sales can be effected. Besides these, the following factor should also be taken into account: Sales budget represents the total sales in physical quantities and values for a future budget period. Some important factors like products, areas, salespersons and types of customers should be kept in mind when preparing a sales budget. The following factors have to be considered when preparing the sales budget:


  

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