QUARTER 2

FORECASTING REVENUES AND COSTS

• Identify essential factors in
forecasting revenues and cost.
• Calculate mark-up and selling price
of product or merchandise
• Compute projected revenues and
costs
Forecasting is a tool used in
planning that aims to support
management or a business owner
in its desire to adjust and cope up
with uncertainties of the future.
Forecasting depend on data from
the past and present and make
meaningful estimates on revenues
and costs. Making informed
estimates reduces risks that might
be experienced by the
entrepreneur in the future.
 . When the economy
grows, its growth is experienced by the consumers.
Consumers are more likely to buy products and services.
. Observe how your
competitors are doing business.
. Changes’ happening in
the environment such as customer demographic, lifestyle
and buying behaviour gives the entrepreneur a better
perspective about the market.
. Another factor that affects
forecasting revenues in the business itself. Plant capacity
often plays a very important role in forecasting.
 After learning the calculations presented, you
can now compute the projected revenue by day,
month and year based on your business concept.
Aling Minda is operating a buy and sell
business, she sells broomsticks (walis tingting) in her
stall at a local market. She gets her broomsticks from
a local supplier for 25 pesos each. She then adds 50
percent mark-up on each broomstick. Every day,
Aling Minda can sell 30 broomsticks a day.
Use the template below and fill in the necessary
figures based on the scenario. Remember to use the
factors to consider in projecting revenues and refer to
tables 1, 2 and 3 as your guide.
These costs are incurred each time revenues are
generated. On the other hand, the business also
incurs costs in its operation, these costs are
called Operating Expenses. Operating expenses
such as payment on Internet connection, Utilities
expense (i.e.Electricity), Salaries and Wages and
Miscellaneous are essential in the operation of
the business; this allows the business to continue
operate in a given period of time.
 refer to the
amount of merchandise or goods sold by the
business for a given period of time.
, refers to goods
and merchandise at the beginning of operation of
business or accounting period.
refer to the merchandise or goods
purchased. Example: Cost to buy each pair of
Jeans or t-shirt from a supplier.
 refer to the
amount of merchandise or goods sold by the
business for a given period of time.
, refers to goods
and merchandise at the beginning of operation of
business or accounting period.
refer to the merchandise or goods
purchased. Example: Cost to buy each pair of
Jeans or t-shirt from a supplier.
• refers to goods and
merchandise left at the end of operation or
accounting period.
• refers to amount paid to transport
goods or merchandise purchased from the
supplier to the buyer. In this case, it is the buyer
who shoulders this costs.
Formula to compute cost of goods sold:
Table 4 shows the costs incurred during the
first month of operation of Fit Mo’ to
Ready to Wear Online Selling Business.
Since Ms. Nista get her stocks from an
online supplier, there is no need to order
ahead and stock more items. Therefore,
there is no Merchandise Inventory,
beginning as well as Merchandise Inventory,
end. Ready to wear items purchased online
from the supplier are then sold as soon as
they arrived
What’ s More 2: