Sales Budget Sales budget is a blue print for making profitable sales.

Its an estimate of probable sales volume in unit, monetary terms and the sales expense allotted to achieve it. So it includes sales volume, expenses and profits. Sales volume and selling expense determine the quality and size of the sales force. Purpose of Sales budget 1) Its a control mechanism by which we can monitor, evaluate and take corrective action in companys selling effort. 2) Instrument of planning. 3) Estimating selling expenses- Its done by standard cost method. First step is establishing the standard cost. Its done by comparing the historical cost of performing the activity with the cost involved in the activity with the changing conditions keeping performance as constant. Some companies do different methods. Some add up the selling expenses and divide it by the no of units sold. Others relate percentage of total selling expense to sales volume. Budgetary procedure There are two basic planning styles Top- down and bottom-up approach. Actual budgetary approach a) Preparation starts at the basic level followed by moving upwards. b) Handling competition for available funds within the Marketing or Sales department. c) Selling the sales budget to top management. d) Using the budget for control purposes e) Effect of errors in budget estimates Flexibility in budgeting: When budget had errors we can alter the estimates by standard procedures or ratios to correct it. *****************