SALES BUDGET

Paper

This paper is written to submit one of Budgetings assignment from Lecturer Dian
Hakip Nurdiasyah, S.E., M.M.

Created by:
Chatrine Iriani 1510631030028
Evita Permatasari Pinem 1510631030064
Indri Aprilyani 1510631030088
Class: 5 AK 8

ACCOUNTING DEPARTMENT
ECONOMIC AND BUSINESS FACULTY
UNIVERSITY OF SINGAPERBANGSA
KARAWANG
2017
 CHAPTER I

THEORYTICAL FRAMEWORK

1.1 Definition of Sales Budget

The University of North Florida states that the sales budget is the
cornerstone of a companys entire budgeting processes; without it, further planning
would almost be impossible. For instance, a business prepares the operating budget
based on figures provided in the sales budget, which takes anticipated revenue
generation from sales into account.
Based on the book of Budgeting which is written by Drs. M. Munandar said
that sales budget is budget plan that arranged systematically and detail about sales
company in the next period, including plan of type, the amount, and the price of the
goods that will be sold, time, and place for sell the goods.
1.2 The Usefulness of Sales Budget
Generally, sales budget has 3 main utilities, as work guidance, as
management tool to create work coordination, and as management tool to evaluate
or to control of work. Those utilities often called managerial utilities, especially in
planning, coordinating, and controlling.
Specifically, sales budget has some important utilities, as the basis to
arrange budget unit that will be produced, because 1 unit that will be produce by
company determined by how many companies are able to sell it, as a basis to
arrange cash budget, because cash sales will become cash income, and as a basis to
arrange account receivable budget, because credit sales will increase account
receivable of company.
1.3 Sales Target
Sales target was made to help management reduce the uncertainty the future
is, make decision on planning process, and to facilitate the control of sales.
1.4 Data and Information to Arrange Sales Budget
The first step to arrange good and accurate budget is collecting data and
information needed. Those will be factors and consideration in arranging budget.
1. Internal data, is data and information in company:
 a. Sales progress in the last period, about type, amount, price of the
goods, time, and place to sell the goods.
b. Company policy which is related with marketing.
c. Production capacity which will be needed to support the sales.
d. Availability of employees assigned in marketing section; the
quantity, and the quality.
e. Supporting facilities of marketing; warehouse, carrier vehicle,
marketing network.
f. Availability of working capital to support marketing activities.
2. External data, is data and information from the outside of the company:
a. Competitor and the rate of market competition.
b. Company position in competition.
c. The average of population income.
d. Consumers.
e. Demand elasticity
f. Religion and social culture.
g. Government policy.
h. National and international economic condition.
i. Development of science and technology.
1.5 How to Set Up the Forecasting
To arrange the sales budget, there are opinion method and statistical method.
Opinion method is a method which based on opinion of the person from executive
opinion, salesman, consumers opinion, and consultant.
Statistical method is a method which calculated the number or historical
data from statistic method, such as, free hand, semi average, moment, least square,
and parabolic method.
 CHAPTER II

DISCUSSION

I.1 Free-Trend Method

Free trend methode determines that broken lines which formed by historical
data, changed become straight lines, with the free way based on the feelings
(intuition) of the person concerned.

Sales progress
2500

2000

1500

1000

500

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Historical Data Estimated

I.2 Semi Average Method

Based on this method, straight line which made as replacement of broken
line formed from historical data, obtain by certain statistical and mathematical
calculations, so the influence of subjective element can be eliminated. Straight line
will make in an equation or a function of straight line (linear) that is Y = a + bX.

a. Semi Average Method-Even

Year Unit (Y) Total of Group Average of Group
2000 1850
2001 1800
2002 1900 11520 1920
2003 2000
2004 1950
2005 2020
2006 1980
2007 1960
2008 2000 12600 2100
2009 2200
 2010 2240
2011 2220

Function of straight line Y= a + bX can be known by using the formula:

a = average of group 1 (K1)
b = average of K2 average of K2/n
n = the time interval between K1 with the average of K2
Application of this formula, on the available data will get the value:
a = 1.920, average of K1 = 1920, average of K2 = 2100
n = 6, that is the interval between average of K1 which is located on the
border between year of 2002 and 2003, and average of K2 which is located on the
border between year of 2008 and 2009. Therefore, the value of b = (2100-1920)/6.
So, the equation of straight line function (trend) sought is Y= 1920+30X.
With this equation can be known trend values, that is value of all points
forming a straight, as a replacement of points which is formed broken line which
derive from historical data, from 2000 until 2011. This trend values can be known
by replace the variable X, that is a time interval between average of group one (K1)
with the desired year. Thus variable X for 2000 is the time interval (year) between
31st December 2002 with 30 June 2000 (mid-year of 2000), that is minus 21/2. So
the 2000 trend value is:
Y = 1920 + 30 (-21/2)
Y = 1845
In the same way, can be known trend values for the following years.
However, can also be known by adding in a row as much as value of b, which is
equal to 30. Thus, trend value which is formed straight line since 2000 until 2011
is:
Year 00 01 02 03 04 05 06 07 08 09 10 11
Unit 1845 1875 1905 1935 1965 1995 2025 2055 2085 2115 2145 2175

In the same way it can be known the value of trends for years to come also,
which is an estimate for the purposes of preparing a sales budget.
Year 2012 2013 2014 2015 2016
Unit 2205 2235 2265 2295 3025

b. Semi Average Method-Odd

 Year Unit (Y) Total of group Average of group
2004 1.780
2005 1.850
2006 1.810
2007 1.890 13.300 1.900
2008 2.000
2009 1.950
2010 2.020
2010 2.020
2011 1.980
2012 1.970
2013 2.100 14.770 2.110
2014 2.200
2015 2.240
2016 2.260

Information:
With the same company, for example, 13 years are provided in historical
data are available in odd numbers, historical data for the year in the middle row is
written twice (in 2010 data samples). Subsequent calculations will result in:
Y = a + bX
a = 1.900
n = 6, distance between the average of K1 the year of 2007 and the average of K2 the year
of 2013.
b = (2.110 1.900) / 6 = 35
So the equation function of straight line is:
Y = 1.900 + 35X
Y 1972 = 1900 + 35 (-3)
Y 1972 = 1.795
Thus it can be known the trend values from 2004 to 2016, as follows:
Year 04 05 06 07 08 09 10 11 12 13 14 15 16
Unit 1795 1830 1865 1900 1935 1970 2005 2040 2075 2110 2145 2180 2215

In the same way can also be known the estimate (forecast) sales over the
next years, which are:

Year 2017 2018 2019 2020 2021

Unit 2.250 2.285 2.320 2.355 2.390
I.3 Moment Trend Method
This Moment Trend Method also uses certain statistical and mathematical
calculation methods to find out the straight line function in lieu of the broken lines
formed by the company's historical data. Thus the influence of subjective elements
can be avoided. The formula used:
Y = a + bX
(I)Y = a.a + b. X
( II ) XY = a. X + b. X2
I.4 Least Square Method
The Least Square Trend method simplifies the formula by attempting such
that the number of X parameters equals zero (X = 0). Thus the formula used in the
calculation according to the Least Square Trend Method is:
Y = a + bX
a = Y / n
b = XY / X2
on condition X = 0
I.5 Parabolic Method
The methods before aiming to find a straight line instead of the broken lines
formed by the historical data. In mathematics, the straight line is expressed in an
equation that is Y = a + bX. For companies that have a series of historical data
that tend to lead to this kind of curvilinear (non-linear) form there are several
forecasting method, each of which is adapted to the shape of the survature of the
line. When the relevant historical data line tends to point to a parabolic curve, the
appropriate method to use is the parabolic method, expressed in a parabolic
equation or function, that is:

Y = a + bX + cX2
For example, historical data of sales price for every box which is produced
by PT Apriliriani Permata for about 17 months started from January 2006 until May
2007 that will be used to calculate the estimate of sales price for every box (Sales
Budget) on 2008:
 Y Y
Month Month
(IDR) (IDR)
Jan (2006) 10000 Sept (2006) 10550
Feb (2006) 9100 Oct (2006) 11000
Mar (2006) 7800 Nov (2006) 12350
Apr (2006) 7200 Dec (2006) 13300
May (2006) 6900 Jan (2007) 14250
June (2006) 7000 Feb (2007) 15350
July (2006) 8600 Mar (2007) 15900
Aug (2006) 9700 Apr (2007) 15900
May (2007) 17000

If historical data is depicting with graphic, it will be:

Historical Data
20000

15000

10000

5000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Historical Data

If noticed, the chart is tend to lead to a parabolic shape, so for the forecasting
is more appropriate using quadratic trend method and it will be count as:
Month Y (IDR) X (XY) (X) (XY) (X4)
January (2006) 10000 (8) -80000 64 640000 4096
February (2006) 9100 (7) -63700 49 445900 2401
March (2006) 7800 (6) -46800 36 280000 1296
April (2006) 7200 (5) -36000 25 180000 625
May (2006) 6900 (4) -27600 16 110400 256
June (2006) 7000 (3) -21000 9 63000 81
July (2006) 8600 (2) -17200 4 34400 16
August (2006) 9700 (1) -9700 1 9700 1
September (2006) 10550 0 0 0 0 0
October (2006) 11000 1 11000 1 11000 1
November (2006) 12350 2 24700 4 49400 16
December (2006) 13300 3 39900 9 119700 81
 January (2007) 14250 4 57000 16 228000 256
February (2007) 15350 5 76750 25 383750 625
March (2007) 15900 6 95400 36 572400 1296
April (2007) 15900 7 111300 49 779100 2401
May (2007) 17000 8 136000 64 1088000 4096
Total 191900 0 250050 408 4995550 17544

Based on quadratic trend method, parabola function as replacement of

broken lines, that shaped by historical data could be calculate with the formula:
Y = a + bx + cx2
(I) Y = an + c X2
(II) XY = b X2 With requirement X = 0
(III) X2Y = a X2 + c X2
Using the same formula, it could be count:
(III) 4.995.550 = 408a + 17.544c x 1
(I) 191.900 = 17a + 408c x 24
(III) 4.995.550 = 408a + 17.544c
(I) 4.605.600 = 408a + 9.792c
389.950 = 7.752c
c = 50,30
If c = 50,30 added to the first equation, it will be:
(I) 191.900 = 17a + 408c
191.900 = 17a + (408 x 50,30)
191.900 = 17a + 20.524
171.376 = 17a
a = 10.080,96
(II) 250.050 = 408b
b = 612,87
So, the equation of trend function is: Y = 10.080,96 + 612,87x + 50,30x2
The value of dots shaped curved lines as replacement of broken lines shaped
by historical data could be known by calculate the value of Y from January 2006
until May 2007:
Month Y Y X Month Y Y X
Jan 10000 8397 (8) Oct 11000 10744 1
Feb 9100 8256 (7) Nov 12350 11508 2
Mar 7800 8215 (6) Dec 13300 12372 3
Apr 7200 8247 (5) Jan 14250 13337 4
May 6900 8434 (4) Feb 15350 14403 5
 June 7000 8695 (3) Mar 15900 15569 6
July 8600 9056 (2) Apr 15900 16836 7
Aug 9700 9518 (1) May 17000 18203 8
Sep 10550 10081 0 Total 191900 191900 0

If historical data and the value of quadratic trend dipiciting on graphic, it

will be seen as:
20000

15000

10000

5000

0
Oct
Jan

Jan
Aug
Mar

Mar
May
Jun
Jul

Nov
Dec

May
Feb

Apr

Sep

Feb

Apr
Historical Data Quadratic Trend

Parameter X for May 2007 is Month Y X Month Y X

8. So, parameter X for January 2008 is Jan 32.764 16 July 47.911 22

16. If parameter X added to the Feb 35.037 17 Aug 50.787 23

equation of quadratic trend, so the Mar 37.411 18 Sept 53.764 24

forecast for sales price of boxes each Apr 39.885 19 Oct 56.842 25
May 42.460 20 Nov 60.020 26
month in 2008 could be calculated as:
June 45.135 21 Dec 63.299 27

2.6 Single Regression Method

Single Regression Method is a method to conduct forecasting which not
only based on historical data from one variable only, but also relate it to one other
variable which is expected to have a strong influence on the development of the
variables to be assessed. According to the Single Regression Method, the line or
regression function can be calculated by the formula:
Y = a + bX
(I) Y = n.a + bX
(II) XY = aX + bX2
 CHAPTER III

CLOSING

3.1 Conclusion
From the discussion in the previous chapter, we could conclude that:
1. Sales budget is a detailed budget plan of quality, price, and quantity of
the product that will be sold and time and place for the goods to be sold.
2. The usefulness of sales budget: as a work guidance, as a tool of
management to create the coordination of work, and to control the work.
3. Sales target was made to reduce the uncertainty the future is.
4. To set up the sales budget, management needs to prepare the internal
data and external data.
5. There are 2 types to do forecasting, opinion method and statistical
method that divided by 5 types, such as, free hand, semi average,
moment, least square, and parabolic method.
3.2 Suggestion
Forecasting of sales budget is important to reduce the uncertainty the future
is. So, management needs to make forecasting especially on sales budget to
planning, coordinating, and controlling sales budget ad all the budgets.
 PREFFERENCE

Munandar. 2000. Budgeting (Edisi 1, Cetakan Ketigabelas). Yogyakarta: BPFE-

Yogyakarta.

Munandar. 2016. Budgeting (Edisi 2, Cetakan Ketiga). Yogyakarta: BPFE-

Yogyakarta.

http://accountingexplained.com/managerial/master-budget/sales

www.landasanteori.com/2015/07/pengertian -anggaran-menurut-definisi.html?

https://www.reference.com/business-finance/sales-budget-be088436a76327ce#