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A forecast of Sales is calculating the amount of items you expect to sell over a certain period, whereas a Production forecast is calculating the amount of items you expect to produce over a certain period.

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Why is it advisable to start with sales the production and capital expenditure forecast in the budgeting process?

Starting with sales forecasts in the budgeting process is advisable because it provides a foundation for estimating revenue, which is crucial for determining the financial feasibility of the budget. Additionally, sales forecasts can drive production forecasts, helping to align production capacity with expected demand. Capital expenditure forecasts should follow sales and production forecasts to ensure that investments are made strategically to support the anticipated sales and production levels. This sequential approach ensures that the budget is realistic and well-aligned with the overall business strategy.


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What is the difference between sales and production?

A forecast of Sales is calculating the amount of items you expect to sell over a certain period, whereas a Production forecast is calculating the amount of items you expect to produce over a certain period.


Why is it advisable to start with sales then production and thencapital expenditure forecast in the budgeting contolg?

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