Discuss the factors that are likely to cause managers to submit budget estimates of sales and...

Discuss the factors that are likely to cause managers to submit budget estimates of sales and costs that do not represent their best estimate or expectations of what will actually occur.

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Factors that are likely to cause managers submit budget estimates of sales and costs that do not represent their best estimates are as follows:

Salesman's estimates- Salesman have direct contacts with their customers. Therefore, saleman could better estimate about the sales in a particular area. If the manager discuss this with salesman and makes budget, however, salesman was not aware of several factors that are to be come, this may create difference in budgeted and actual sales.
Availability of Raw Materials - Sales budget is prepared on the basis of availability of raw materails. If the uncertain changes occurs in the availability of raw material, this creates difference.
Change in Government policies - If upcoming changes in governement policies are not kept in view by the managers, then it may create in difference. Also, the tax rates may also change, thereby change in costs.
Seasonal Fluctuations - Seasonal Fluctuations is one of the major factor that is to be considered by the manager. Seasonal changes majorly effects the sales of any organization.
Import possibility and enhanced Competition - If the same industry products are imported and are available in market at relatively lower prices, this increases competition. If competition is increased the organization would have to lower their price and thereby lower profits.

ekkarill92 answered 1 year ago

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