Podcast
Questions and Answers
Which of the following best describes the purpose of forecasting in business?
Which of the following best describes the purpose of forecasting in business?
- To eliminate all risks associated with business operations.
- To accurately predict potential future revenues and costs. (correct)
- To guarantee a specific level of profit for the business.
- To create a detailed historical record of past financial performance.
Which factor is most important for an entrepreneur to consider when forecasting revenues?
Which factor is most important for an entrepreneur to consider when forecasting revenues?
- External and internal factors affecting the business. (correct)
- The entrepreneur's personal financial goals.
- The preferences of the entrepreneur's family and friends.
- The average revenue of businesses in unrelated industries.
Why is it important for an entrepreneur to make their forecasting as credible and accurate as possible?
Why is it important for an entrepreneur to make their forecasting as credible and accurate as possible?
- To inflate the perceived value of the business for a quick sale.
- To discourage competitors by creating an illusion of market dominance.
- To impress potential investors with overly optimistic projections
- To avoid potential complications in the future by planning appropriately. (correct)
Which of the following scenarios illustrates how a business's internal aspects affect revenue forecasting?
Which of the following scenarios illustrates how a business's internal aspects affect revenue forecasting?
How do competing businesses impact an entrepreneur's revenue forecasting?
How do competing businesses impact an entrepreneur's revenue forecasting?
If Ms. Nista sells t-shirts for ₱135 each and jeans for ₱345 each, and she sells 10 t-shirts and 6 jeans, what is her total daily revenue?
If Ms. Nista sells t-shirts for ₱135 each and jeans for ₱345 each, and she sells 10 t-shirts and 6 jeans, what is her total daily revenue?
What is the primary difference between 'Sales' and 'Service Income' in the context of revenue recognition?
What is the primary difference between 'Sales' and 'Service Income' in the context of revenue recognition?
Using Ms. Nista's example, if her daily revenue is ₱3,420, what would be her projected monthly revenue?
Using Ms. Nista's example, if her daily revenue is ₱3,420, what would be her projected monthly revenue?
What is the purpose of calculating the 'mark-up' price?
What is the purpose of calculating the 'mark-up' price?
If an item costs ₱90 and has a 50% mark-up, what is the selling price?
If an item costs ₱90 and has a 50% mark-up, what is the selling price?
Which of these factors relating to changes in the community might impact revenue projections?
Which of these factors relating to changes in the community might impact revenue projections?
If Mr. Carlito sells apples for ₱12 and mangoes for ₱37.5, selling 200 of each daily, what is his projected daily revenue?
If Mr. Carlito sells apples for ₱12 and mangoes for ₱37.5, selling 200 of each daily, what is his projected daily revenue?
What formula is used to calculate the mark-up price?
What formula is used to calculate the mark-up price?
If Mr. Carlito's fruit store has a projected daily revenue of ₱9,900, what is the projected yearly revenue?
If Mr. Carlito's fruit store has a projected daily revenue of ₱9,900, what is the projected yearly revenue?
Rico sells an acoustic guitar for ₱10,000 with an 80% markup. What is the selling price of the guitar?
Rico sells an acoustic guitar for ₱10,000 with an 80% markup. What is the selling price of the guitar?
Mr. Yuzon sells engine oil for ₱250 with a 20% markup. What is the cost of the engine oil before the markup?
Mr. Yuzon sells engine oil for ₱250 with a 20% markup. What is the cost of the engine oil before the markup?
If Mr. Yuzon sells 40 glow plugs daily, what is his projected daily revenue from this item?
If Mr. Yuzon sells 40 glow plugs daily, what is his projected daily revenue from this item?
What is the projected monthly gross revenue of YZNautosupply if daily sales are 2000 items at an average unit retail price of ₱500?
What is the projected monthly gross revenue of YZNautosupply if daily sales are 2000 items at an average unit retail price of ₱500?
If an entrepreneur wants to increase the markup on existing products, what needs to happen?
If an entrepreneur wants to increase the markup on existing products, what needs to happen?
Why is it important to identify essential factors in forecasting revenues and costs?
Why is it important to identify essential factors in forecasting revenues and costs?
Flashcards
What is Revenue?
What is Revenue?
Revenue is recognized when earned, whether paid in cash or charged to the customer's account.
What is Forecasting?
What is Forecasting?
An attempt to predict what may happen in the future, helping businesses avoid complications.
What is mark-up?
What is mark-up?
The amount added to the cost of a product to determine the selling price.
Economic Condition
Economic Condition
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Competing Businesses
Competing Businesses
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Changes in the Community
Changes in the Community
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Internal Aspect of Business
Internal Aspect of Business
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Mark up price formula.
Mark up price formula.
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Selling price formula
Selling price formula
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Study Notes
- Forecasting revenues and costs is an important aspect of entrepreneurship.
- Essential forecasting factors, mark-up calculation, projected revenues/costs, tables, and the significance to business are key.
Revenue
- Revenue is recognized when it is earned, whether paid in cash or charged.
- Sales and Service Income are terms related to revenue.
- Sales is used for merchandising or retailing businesses.
- Service Income is used to record revenues earned by rendering services.
Forecasting
- Forecasting is an attempt to predict future events.
- Entrepreneurs aim for credible and accurate forecasting to avoid complications.
- External and internal factors must be considered as the basis for forecasting business revenues.
Factors for forecasting
- Economic condition of the country: Growth experienced by consumers.
- Competing businesses/competitors: Information about competitors.
- Changes happening in the community: Customer demographic, lifestyle, buying behavior.
- Internal aspects of the business: Plant capacity.
Example: Fit Mo’to Ready to Wear Online Selling Business
- Ms. Fashion Nista opened this online business specializing in clothes for teens/young adults.
- It sells 10 t-shirts and 6 pairs of fashion jeans daily.
- T-shirts cost 90 pesos each, jeans cost 230 pesos each, with a 50% mark-up on all RTW items.
Mark-Up and Selling Price Calculations
- Mark-up is the amount added to the cost to determine the selling price.
- Mark Up Price = (Cost x Desired Mark Up Percentage)
- Example: T-shirt mark-up = (90.00 x 0.50) = 45.00
- Selling Price = Cost + Mark Up
- Example: T-shirt selling price = 90.00 + 45.00 = 135.00
Projected Daily Revenue for Fit Mo’to
- T-shirts: Cost per unit is 90.00, a mark-up of 45.00, a selling price of 135.00, 10 items, 1,350.00 in revenue
- Jeans: Cost per unit is 230.00, a mark-up of 115.00, a selling price of 345.00, 6 items, and 2,070.00 in revenue
- Total = 320.00 cost, 160.00 mark-up, 480.00 selling price, 16 quantity, and 3,420.0 value (sum)
Projected Monthly and Yearly Revenue for Fit Mo’to
- Monthly revenue is calculated by multiplying daily figures by 30 days.
- Yearly revenue is calculated by multiplying daily figures by 365 days.
- Example: Daily revenue is 3,420.00. Therefore, monthly revenue is 3,420.00 x 30 = 102,600.00
- Example: Yearly revenue is 3,420.00 x 365 = 1,248,300.00
Projected Volume and Revenue for Fit Mo'to
| RTW | Price | Volume M | Revenue M | Volume Y | Revenue Y |
|---|---|---|---|---|---|
| T-Shirts | 135.00 | 300 | 40,500.00 | 3,650 | 492,750.00 |
| Jeans | 345.00 | 180 | 62,100.00 | 2,190 | 755,550.00 |
| Total | 480.00 | 480 | 102,600.00 | 5,840 | 1,248,300 |
Frutas Ng Tatay Mo! Fruit Store
- Mr. Carlito's fruit store sells 400 fruits daily, including 200 apples and 200 mangoes.
- Apples cost 8.00 per piece, and mangoes cost 25.00 per piece, with a 50% mark-up on all fruits.
Projected Daily Revenue for Frutas ng Tatay Mo!
- Apples: Cost per unit is 8.00, a mark-up of 4.00, a selling price of 12.00, 200 items, and 2,400.00 in revenue
- Mangoes: Cost per unit is 25.00, a mark-up of 12.5, a selling price of 37.5, 200 items, and 7,500.00 in revenue
- Total: 33.00 cost, 16.5 mark-up, 49.5 selling price, 400 quantity and 9,900.00 value (sum)
Projected Monthly and Yearly Revenue for Frutas ng Tatay Mo!
| Fruit | Price | Volume M | Revenue M | Volume Y | Revenue Y |
|---|---|---|---|---|---|
| Apples | 12.00 | 6000 | 72,000 | 73,000 | 876,000 |
| Mangoes | 37.50 | 6000 | 225,000 | 73,000 | 2,737,500 |
| Total | 49.5 | 12,000 | 297,000 | 146,000 | 3,613,500.00 |
Music Touch Store
- Rico Blanco's "Music Touch" sells an average of 100 instruments daily.
- It sells 25 acoustic guitars (10,000/pc), 25 bass guitars (18,000/pc), 10 drum sets (25,000/pc), 5 saxophones (25,000/pc), 5 pianos (25,000/pc), 10 strings (200/pc), and 20 ukuleles (5,000/pc).
- Each item has an 80% mark-up
YZNautosupply
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Mr. Yuzon's YZNautosupply sells approximately 2000 items daily.
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A catalogue of some of the parts include 100 engine oils, 100 radiator coolants, 150 fluids, 50 synthetic greases, 100 head gaskets, 100 piston rings, 150 tie rods, 50 sensors, 200 bearings, 10 rack and pinions, 10 rack ends, 100 brake pads, 80 hydraulic hoses. 40 glow plugs, 160 belts, 90 shock absorber sets, 10 air filters, 200 brake light bulbs and 10 crank shaft pulleys.
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ENGINE OIL – 250.00/pc, COOLANT – 150.00/pc, FLUIDS – 120.00/pc, Synthetic grease 280.00/pc, Head Gasket - 2,500.00/pc, Piston rings – 1,500.00/pc, Tie rods – 750.00 /pc, Sensors - 500.00/pc, Bearings – 895.00/pc, Rack and pinion – 7,000.00/pc, Rack end – 700/pc, Brake pads – 1,800.00/pc, Hydraulic hose – 2,000.00/pc, Glow plugs – 400.00/pc, Belts – 200.00/pc, Shock absorber - 2,500/pc, Air filter- 400.00/pc, Bulbs – 8.00, General supply -100.00/pc, Spark plug 700/pc and Crank shaft pulley 2000/pc
These all follow a 20% mark-up
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