Acc561 Sales Forecast

Running head:

Mark Buczynski
University of Phoenix

"A sales forecast is a prediction of sales under a given set of conditions." (Horngren, Sundern, Stratton, Burgstahler, & Schatzberg, 2008, p. 303) Forecasting sales for any company is risky, even when the company has successful track record and a product desired by the masses. Forecasting makes several assumptions about a product and the ability of being sold. The company must first look at the demand, if demand is high, then setting sales targets too high could find the company with an excess of product. Setting targets too low will have the opposite effect. Resources must be considered when setting targets.
For Guillermo, his biggest challenge in predicting sales will be the impact his competition has in his area. " Sales depend on the strength and actions of competitors. To forecast sales, a company should consider the likely strategies and reactions of competitors, such as changes in their prices, product quality, or services."(Horngren et al., 2008, p. 303) Guillermo's reasoning for considering becoming a distributor and marketing his high end furniture because of foreign competition and his inability to compete. Guillermo must take all the changes that has affected his business into consideration, weigh his options and decide on a course of action. Budgeting his future business on future sales will have two possible outcomes, success or failure.

Horngren, C. T., Sundern, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2008). Introduction to Management Accounting (14 ed.). Upper Saddle River, NJ: Prentice Hall.