Question

outline two methods management could use on deciding sales forecast in management accounting

Answer 1

The two methods that management can use on deciding sales forecast in management accounting are quantitative methods and qualitative methods.

Quantitative methods are based on making use of historical sales data to predict future sales. The different types of qualitative methods are moving average method, exponential smoothing method, decomposition method, ratio/naïve method and regression.

Qualitative methods involve developing sales forecasts but not on the basis of data and numbers of past data. Different types of qualitative methods are expert’s opinion, Delphi method, use of test marketing, survey of intentions of buyers, test marketing etc.

Using the above two methods management accountants can develop product level sales forecast for different product items and variants. They can also develop short term forecast and long term forecasts. The forecast can be a for a particular region or area or can be aggregate for all regions as well.